Commercial Federation and 
 Colonial Trade Policy. 
 
 JOHN DAVIDSON, M.A., Phil. D. (Edin.) 
 
 Professor of Political Economy in the University of 
 A'ew Brunswick. 
 
 SWAN SONNENSCHEIN & CO., Ltd. 
 New York: CHARLES SCRIBNER'S SONS. 
 
 1900.
 
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 TABLE OF CONTENTS. 
 
 PAOB 
 
 CHAPTER I. 
 
 England's Commercial Policy towards her Colonies since 
 
 the Treaty of Paris ....... i.^^ 
 
 CHAPTER n. 
 Commercial Policy, continued ._-... 34-66 
 
 CHAPTER HI. 
 Commercial Federation ---..... 67.101 
 
 CHAPTER IV. 
 Canada and the Empire ....... 102.126 
 
 CHAPTER V. 
 
 Trade and the Flag 
 
 - I. '7-1 
 
 /-'.■)3
 
 CHAPTER I. 
 
 ENGLAND'S COMMERCIAL POLICY TOWARDS HER 
 COLONIES SINCE THE TREATY OF PARIS. 
 
 I. The Changes in England's Policy. 
 
 IT is not astonishing that the Abb^ Raynal should have 
 accused " that wise and honest traveller," Arthur Young, 
 of paradox, when Young asserted, within a few years of the 
 signing of the Treaty of Paris, that the American Revolution 
 " had proved a blessing to the world, but much more so to 
 England than to America " ; for by all the canons of the 
 mercantile system England should have been ruined by that 
 event. As Adam Smith had pointed out, before the war 
 began English merchants anticipated ruin ; and France con- 
 sidered that she had triumphed over her victorious rival when 
 the independence of the revolting colonies was recognized. 
 England, as Adam Smith shows at such tedious length, had 
 sacrificed her European to her colonial trade, of which she 
 claimed the monopoly ; and the Treaty of Paris destroyed 
 that monopoly on which she had apparently come to depend 
 for her prosperity. Yet England was not ruined ; and it was 
 indeed, as Arthur Young wrote, 
 
 one of the most remarkable and singular experiments in the science 
 of politics that the world has seen ; for a people to lose an empire — 
 thirteen provinces — and to GAIN by that loss an increase of wealth, 
 felicity and power !' 
 
 ^Travels in France (Miss Betham-EdwarJ's edition), pag-e 361. The capitals and 
 italics are Young's.
 
 'T^^a^-'^ 
 
 COMMERCIAL POLICY. 
 
 The United States were free to buy and to sell where they 
 chose, and they could manufacture where and when and what 
 they pleased ; for the whole system of regulations had disap- 
 peared. But the United States continued to be a customer of 
 England, and bought more, not less, than she had done under 
 the colonial system of monopoly. The volume of trade 
 doubled within fifteen years of the signing of the Treaty of 
 Paris ; and what should have proved England's ruin proved 
 her great gain, as the figures of trade show :^ 
 
 Year. Exports to States. Imports from States. 
 
 1771-73, average of 3 years . . ;^3,o64,843 ^1,322,532 
 
 1790-92, ,, ,, . . 3,976,211 1,141.337 
 
 1798-1800, ,, ,, . . 6,507,478 1,986,528 
 
 Evidently the mother country had gained nothing but disad- 
 vantage from the regulations which had cost her an empire ; 
 for in losing subjects she did not lose customers, and indeed 
 gained more than the benefits of the monopoly without having 
 the trouble and the anxiety of securing it. Adam Smith's 
 doctrines were vindicated by the event almost as soon, there- 
 fore, as they were propounded. The advantages of colonial 
 trade, he had declared, were immense; so great, indeed, that 
 they had not been offset by the baneful effects of the short- 
 sighted policy which had been adopted. When the monopoly 
 was destroyed, the benefits were almost instantly doubled. 
 
 Some of the lessons, so forcibly illustrated, were quickly 
 learned, and the name of Adam Smith became a power in the 
 land. Statesmen enrolled themselves as his disciples, and 
 the first fruits of a new policy of encouraging rather than of 
 discouraging trade were garnered in 1785, in Eden's commer- 
 cial treaty. Indeed, had it not been for the French Revolu- 
 tion and the Napoleonic wars, the period of free trade in 
 England might have been anticipated by half a century. The 
 
 I Brougham : Colonial Policy, vol. i, pp. 362-263.
 
 COMMERCIAL POLICY. 
 
 whole machinery of English administration had been used to 
 secure a result which was twice as well secured when the 
 machinery was thrown aside. In the light of history, at any 
 rate, it was endent that regulations were not commerce. 
 
 Naturally the whole lesson of " the late unhappy events in 
 America," as Pitt called them, was not learned at once, nor 
 by all. Some speakers and writers tried to show that the 
 whole policy had favored the colonies, and that England was 
 well quit of it ; but these are obviously reflections of the 
 sour-grape order. The patent fact was that the mercantile 
 colonial policy had been found wanting. It had aimed at 
 creating a nation of customers ; and the customers were 
 found to buy more after the destruction of the system. " The 
 only use of the American colonies," maintained Lord 
 Sheffield on the eve of the Revolution, " is the monopoly of 
 their consumption." It is no wonder, therefore, that many 
 were of Arthur Young's opinion, " that all transmarine or 
 distant dominions are sources of weakness, and that to 
 renounce them would be wisdom ; " ^ and when we denounce 
 the Little Englanders for regarding colonies as possible cus- 
 tomers only, we ought to remember that the colonial system, 
 the revolt from which they expressed, was based upon the 
 same idea. To raise up a nation of customers may not be a 
 noble ideal for a colonial empire ; but it is at least better, 
 to say nothing of the fact of its being more profitable, that 
 the custom should be voluntary. 
 
 The industrial conditions of England at the end of the 
 eighteenth century were favorable to the growth of the new 
 conception of trade." England, which for centuries had been 
 one of the backward countries of Europe, had in the 
 eighteenth century come to the front. Her natural resources, 
 
 ' Travels in France, p. 262. 
 
 2 It is a remarkable fact that the beginning's of the United States colonial power 
 should coincide with a general recognition that the nation has outgrown its own 
 home market and is strong enough to hold its own in the world's markets.
 
 ■ »7-<ti»m^^'^r^\^^-^'^W^^!l!ew 
 
 COMMERCIAL POLICY. 
 
 her advantageous position and her immunity from foreign 
 invasion at last began to tell ; and it was no mere accident 
 of the birthplace of a few inventors that the factory system 
 first developed in England. When the colonies revolted 
 the industrial revolution was well under way, and England 
 had no industrial competitor that was at all formidable. The 
 idea of relative power had no importance when it was already 
 " Eclipse first and the rest nowhere " ; and the Napoleonic 
 wars gave England a start of half a century-. At the end of 
 the eighteenth century she had practically no rivals in trade 
 or in industry. She secured the trade of the colonies and of 
 the United States, because she could sell more cheaply than 
 any other nation. Tf the revolt had occurred half a century 
 earlier, it is not likely that the truth of Adam Smith's polemic 
 would have been so strikingly vindicated. England then had 
 competitors ; and though the trade of the revolted colonies 
 might have greatly increased, it is not at all certain that she 
 would have engrossed it If we can say, converting Bacon's 
 unhistorical praise of Henry VII., that Adam Smith bent 
 back EngUsh policy from considerations of power to con- 
 siderations of plenty, we must also recognise that his imme- 
 diate influence was due to the fact that considerations of 
 power had no longer for England any importance. She was 
 secure of the market not only of her surviving colonies but 
 also of the United States, as she was later secure against the 
 Milan and Berlin decrees and the Non-Intercourse Act, be- 
 cause she had a practical monopoly of the new industrial 
 processes. As she became conscious of her advantage, she 
 came to depend more and more on her natural strength and 
 less and less on the artifices of legislation. Restriction and 
 monopoly were seen to be artificial hindrances to trade. The 
 great instance of the benefits of freedom was constantly before 
 her eyes, and it was recognised that the old regulations had 
 done harm to both parties and good to neither. The mono- 
 
 ■i
 
 COMMERCIAL POLICY. 
 
 poly of a colonial market was a matter of no consequence 
 when the world's market was open ; and she held both be- 
 cause she could produce better and cheaper than any other 
 nation. 
 
 The revolt of the American colonies discredited the old 
 commercial policy of restriction ; but it also upset the old 
 policy of political freedom. The surviving continental colo- 
 nies had never been accustomed to free government. Nova 
 Scotia had from the first been controlled by the home govern- 
 ment, and the conquered colonies which had been retained 
 at the peace of 1763 were naturally under absolute rule. 
 These colonies had remained' loyal while the free colonies 
 had revolted ; and it seemed a just inference that the greater 
 political freedom had been the cause of the revolt. As the 
 English government had no desire to lose the rest of the 
 colonies, it appeared the part of political wisdom to reverse 
 the former policy and adopt a system of supervision of the 
 internal affairs of the co'lonies. Politically the colonies were 
 no longer to be treated " with salutary neglect." They were 
 to be watched, that the first signs of discontent might be 
 crushed and a repetition of the American disaster prevented. 
 The object of colonial political policy was to isolate and 
 weaken the colonies so as to render them less formidable ; 
 and as English statesmen had made a maxim out of Peter 
 Kalm's casual observation about the deterrent influence of 
 the presence of the French in Canada, they determined to 
 perpetuate the deterrent influence. Pitt declared that his 
 object in bringing forward the Quebec Bill in 1791 was "to 
 create two colonies separate from and jealous of each other, 
 so as to guard against a repetition of the late unhappy re- 
 bellion which had separated the thirteen colonies from the 
 Empire."^ Fox, indeed, asserted that the only method of 
 retaining distant colonies was to enable them to govern them- 
 
 1 Annual Register, 1791, page 108.
 
 '•^^i 
 
 COMMERCIAL POLICY. 
 
 selves ; but as the revolted colonies had possessed the right 
 of self-government, his protests were unheeded, and Canada 
 was saddled with a reactionary constitution. The change in 
 political policy is significantly indicated by the change in the 
 method of administration. As long as commercial restrictions 
 alone were enforced, and there was no interference with the 
 internal affairs of the colonies, a board of trade and plan- 
 tations was sufficient ; after the change in policy, a colonial 
 minister, a member of the cabinet, was appointed, to whom 
 alone the governments of the colonies were responsible, and 
 the administration of the domestic affairs of the colonies had 
 to be in accordance with the ideas of the ministry. The 
 English Parliament indeed bound itself not to impose any 
 taxes on the colonies^ except those necessary for the regu- 
 lation of commerce, and declared that these should be levied 
 and disposed of by the legislature of each province ; but the 
 freedom was illusory. These were the Crown duties, which 
 were the great cause of political discontent in the colonies 
 in the early decades of this centur)-. They might be levied 
 for purely commercial purposes, but they were never really 
 at the disposal of the colonial legislatures. - 
 
 This new political policy evoked a continuous protest from 
 the English reformers. The existence of democratic govern- 
 ment in the American colonies had favoured the growth of 
 freedom at home ; and now those who sought reform at home 
 were forced to become advocates of colonial reform. Their 
 
 iQuebec Revenue Act, 1775. Colonial Tax Repeal Act, 1778 : " Whereas taxation 
 by the Parliament of Great Britain, for the purpose ot raising- a revenue in his 
 Majesty's Colonies, . . . has been found by experience to occasion great uneasiness 
 and disorders among- his Majesty's faithful subjects . . . ; and whereas in order . . . 
 to remove the said uneasiness ... it is expedient to declare that the King and 
 Parliament of Great Britain will not impose any duty, tax or assessment for the 
 purpose of raising a revenue in any of the Colonies ..." 
 
 ^As late as 1833 these Crown duties by various devices were in a large measure 
 appropriated tor imperial purposes without the consent or the knowledge of the 
 colonial legislatures. See Hannay, Life of Sir Leonard Tilley, page 91.
 
 COMMERCIAL POLICY. 
 
 desire for colonial freedom was not entirely disinterested, for 
 they found that the patronage which the home government 
 controlled in the colonies was one of the principal causes of 
 corruption in England. To abolish this colonial patronage 
 was to weaken the government at home ; and the struggle for 
 colonial constitutional government was part of the general 
 struggle for pohtical freedom. From the time of Fox on- 
 wards, there is a continuous protest against the tyranny of 
 the pohtical system in the colonies ; and the protest was the 
 more vigorous, because the system seemed to exist solely for 
 the benefit of the place-hunters. 
 
 This change in England's political policy, combined with 
 the new knowledge of the disadvantages of monopoly, gave a 
 certain vogue to the Greek ideal of a colony, which had been 
 revived by the French economists who had inspired Adam 
 Smith. In 1750 Turgot had declared that 
 
 colonies are like fruits which cling- to the tree till they ripen. 
 Carthage declared itself free as soon as it could take care of itself; 
 so likewise will America. 
 
 And Adam Smith does not stand alone among English writers 
 in his criticism of colonial policy. Earlier in the eighteenth 
 century another Glasgow professor had propounded to himself 
 the question, " When have colonies a right to be released from 
 the dominion of the parent state?" and had answered: 
 " Whenever they are so increased in numbers and strength as 
 to be sufficient by themselves for all the good ends of a poli- 
 tical union." ^ The French Revolution at first tended to 
 strengthen this view ; but when the long war broke out, 
 national sentiment was stirred, and the idea of liberating the 
 colonies was relegated to the background. The maintenance 
 
 iHutcheson, Ethics. Cf. Roscher, Kolonien, page 227, note, for further references 
 to these early Little Englanders, Josiah Tucker. Townsend and Arthur Younf. 
 C/. Lecky's statement of Tucker's views, History of England, vol. iii, page 389.
 
 COMMERCIAL POLICY. 
 
 of all possessions — even of those that were commercially 
 worthless — became a national necessity. Adam Smith had 
 said : 
 
 No nation ever voluntarily gave up the dominion of any province, 
 how troublesome soever it might be to govern it, and how small so- 
 ever the revenue it afforded in proportion to the expense it occa- 
 sioned. Such sacrifices, though they might frequently be agreeable 
 to the interest, are always mortifying to the pride of every nation.' 
 
 It would have been especially mortifying either to lose or to 
 set loose any colony during a time of national danger. More- 
 over, in time of war the continental American colonies were 
 valuable commercially, not only because of what they bought 
 but because of what they supplied. They sa\-ed England 
 from dependence for naval stores on the Baltic countries, 
 which were exposed to the influence and the attacks of Eng- 
 land's enemies. 
 
 The general effect of the French Revolution and of the 
 French wars was to throw back the cause of reform. They 
 prevented Pitt from reforming the Enghsh tariff ; they made 
 the government chary about allowing free speech ; and they 
 fastened the new political system more firmly upon the colo- 
 nies. The only advantage which this reactionary policy 
 brought to the colonies was that it made the ultimate triumph 
 of constitutional liberty in the colonies more complete, for it 
 enlisted on their behalf the energies of the political reformers 
 at home. 
 
 The English administration was not foolish enough to 
 believe that they could govern the colonies on purely restric- 
 tive principles. Their object was to hold the colonies ; and 
 it was obvious that the American colonies were lost, not 
 merely by allowing them political freedom, but also by not 
 making commercial concessions to them. So the new colonial 
 
 1 Adam Smith, Wealth of Nations (Nicholson's edition), pag:e 254.
 
 COMMERCIAL POLICY. 
 
 policy granted commercial concessions to the colonies, in 
 order to create a class whose interests should be bound up in 
 the maintenance of the political system. Commercial restric- 
 tions were made less rigid and burdensome ; and the system 
 of bounties, which had been in part adopted before the War 
 of Independence, was extended. It is a moot-point whether 
 the further privileges in the shape of preferential trade were 
 adopted for the sake of England or for the sake of the colo- 
 nies ; but there is no doubt that they operated to stimulate 
 the industries of the colonies. For Canada they were the 
 cause of a great industrial advance. Previously much of the 
 enterprise of the country had been confined to the fur trade 
 with the Northwest ; but from this time the preference to 
 colonial lumber made the lumber industry profitable and 
 practically created the colony of Xew Brunswick. 
 
 In this new development of colonial policy Canada is the 
 centre of interest. The home government apparently was con- 
 vmced that Canada was the key to the position. ^ They 
 feared its loss, partly because of its proximity to the United 
 States, partly on account of the origin of its people; and 
 they especially desired to keep it because it was the great 
 source of their naval supplies. For these reasons the most 
 abundant concessions were made to Canada. Before the Re- 
 volution the West Indian colonies had been favored, and the 
 burdens of the restrictive policy were mainly felt in the nor- 
 thern continental colonies. But after the Revolution the West 
 Indies were sacrificed to Canada and the other continental 
 colonies. During the ante-Revolution period the islands had 
 drawn their supplies from the continental colonies, and had 
 also found there an exclusive market for their sugar and rum. 
 Their climate was not suited for the growth of provisions ; 
 
 iHaliburton. Bubbles of Canada, page 13. ••Canada has had more privileges and 
 indulgences granted to it than any other of our American colonies. . . . and the 
 interesU of commerce and of persons of British origin [have been] postponed to suit 
 their convenience or to accommodate their prejudices."
 
 10 COMMERCIAL POLICY. 
 
 and these, with lumber and slaves, had been imported from 
 the north. When, however, the American colonies became 
 the United States, the Navigation Acts operated to shut the 
 British West Indies out from their natural market. They 
 were confined to the Canadian market. Lumber and fish they 
 might have received' thence in sufficient quantity ; but the 
 northern colonies did not always produce sufficient provisions 
 for their own needs. From 1779 ^'^ ^7^^ the export of grain 
 from Canada was prohibited ; and the maritime colonies, 
 which had been excluded from the operation of Jay's Treaty 
 so far as free intercourse was concerned, had from time to 
 time to be saved from actual want through the suspension, 
 by governor's proclamation, of the restrictions on the impor- 
 tation of food-stuffs.^ The result of restriction to the Cana- 
 dian market was frequent and terrible suffering in the island 
 colonies. The planters- were forced to grow provisions for 
 which the soil was not suited, and the colonies were con- 
 stantly in sight of famine. Between the years 1780 and 1787 
 there was an unusual succession of hurricanes, which de- 
 stroyed all the provision crops and occasioned great scarcity. 
 Fifteen thousand negroes perished in seven years in Jamaica 
 alone. The West Indian colonists demanded that the con- 
 tinental market should again be thrown open to them ; and 
 by the treaty of 1794, American vessels not exceeding seventy 
 tons burden were allowed to trade with the islands. But the 
 concession was hedged about by so many restrictions that the 
 planters had to import American provisions via Montreal, to 
 which by the same treaty free importation by land from the 
 United States had been permitted. This roundabout trade 
 did not supply the necessary relief, and under the treaty the 
 direct trade was to cease two years after the establishment of 
 peace in Europe. Accordingly, in defiance of both the spirit 
 
 iBy the beginning- of the century these proclamations were so frequent that free 
 importation was practically continuous. C/. New Brunswick Royal Gazette, pasttnt. 
 Cf. also Roscher, Kolonien, page 240.
 
 COMMERCIAL POLICY. 11 
 
 and the letter of the Navigation Laws, the governors of the 
 West Indian colonies issued proclamations permitting free 
 importation from the United States. Since the con- 
 tinental colonies could not supply the demand, and 
 since, even if they had been able, the navy could 
 not have provided the necessary convoys, the governors 
 were forced to suspend the restrictions, relying upon subse- 
 quent indemnification. Inj 1806, when Imperial Parliament 
 sought to regularize these proceedings by a formal act per- 
 mitting freer importation, the imports into the West Indies 
 from England and her other colonies were less than one-third 
 of the whole, while British North America did not contribute 
 one-twelfth of the supply.^ But with every concession made 
 then and later, the West Indian colonies continued to suffer. 
 Even after Huskisson had reformed the Navigation Laws it 
 was estimated, in 1831, that the colonial policy compelled the 
 Antilles alone to pay for provisions ;iri 87,000 per annum more 
 than they would have paid had trade been free to follow its 
 natural course. The continental colonies simply could not 
 supply the islands ; yet the home government seemed to turn 
 a deaf ear to the protests of the planters. The necessity of 
 the situation appeared to be to conciliate Canada and the 
 neighbouring colonies ; and the home government was con- 
 fident of its ability to hold the islands, whatever threats of 
 disloyalty came from the planters. 
 
 This preference was given to the northern colonies at the 
 expense of the islands ; but a preference was given to both at 
 the expense of the English consumer. There was nominally a 
 
 lAccordingf to a return made to the House of Commons, February 15, i8o8, the 
 following' were the percentages of imports into the West Indies and the South 
 American colonies from the United States.: 
 
 PER CENT. PER CENT. PBR CENT. 
 
 Grain 65 Dry fish 54 Oak and pine boards 97 
 
 Bread and flour 91 Pickled fish 32 Shingles 99 
 
 Rice 98 Cows and oxen 80 Staves 96 
 
 Beef and pork 49 Sheep and hogs 90
 
 yi^^^^^ 
 
 12 COMMERCIAL POLICY. 
 
 reciprocal advantage for England, or at least for the English 
 producer; but it was little more than nominal, for England 
 then had a practically unqualified monopoly of manufacturing. 
 English trade and industry were safe from the feeble competi- 
 tion of belated continental methods; and moreover Europe 
 was devastated by war in every corner. Every nation had to 
 go to England for manufactures ; and it is said that the 
 soldiers of Napoleon marched to Moscow clad in English cloth, 
 imported in defiance of the Berlin and Milan decrees. Thus 
 the colonies, though they were by regulations restricted to the 
 English market, were compelled to do only what they would 
 otherwise have done — to buy in the cheapest market. Gain 
 to England there was none, and the disadvantage to the colo- 
 nies was mainly sentimental. Dr. Parkin claims that this 
 system was mutually advantageous.^ Politically advantageous 
 to England it may have been ; but commercially it was un- 
 necessary and therefore disadvantageous to England, while 
 the colonies had all the advantage on their side. 
 
 It must be remembered, however, that this preference was 
 given to the colonies largely as a compensation for political 
 restraint. It is necessary to bear this in mind because, as the 
 political restraints were removed and the colonies obtained 
 responsible government, the reformers in England came to 
 regard the sacrifice of the English consumer with abhorrence. 
 The commercial preference in the English market survived 
 the system of political restraint; the burden survived the 
 reason for it ; and the reformers who had been most active 
 in securing political freedom for the colonies became the 
 Little Englanders at whom it is now the fashion to lift up our 
 reproach. It is on the whole well that nations forget the 
 things which are behind and retain no sense of gratitude for 
 favors past ; but none the less the self-governing colonies owe 
 an immense debt of gratitude to the Little Englanders and 
 
 i 'Parkin, Imperial Federation, c. 13.
 
 COMMERCIAL POLICY. 13 
 
 the reform ideas they represented. Without their help, in 
 Parliament and out of it, the struggle for responsible govern- 
 ment would have been longer in reaching a successful issue. 
 It is not wonderful that in their agitation against the preferen- 
 tial system they should have been betrayed into expressions 
 intimating the worthlessness of all colonies. The old notion 
 that a colony must be of some use to the mother countr)- was 
 gradually dying out, and nothing had come to take its place. 
 For the moment the Greek idea of a colony was popular ; 
 and when the colonies were found to be making the con- 
 tinuance of the preferential duties a condition of their loyalty, 
 it was not unnatural that men should ask whati advantages 
 the colonies conferred upon England. Had the colonies ap- 
 pealed to something higher than commercial interests, English 
 pulses might have quickened to the glories of a colonial em- 
 pire. The colonies, however, no less than the mother country, 
 looked at the question from the point of view of trade and 
 commerce merely ; and if there were Little Englanders at 
 home, there were annexationists in the colonies. 
 
 The truth of the matter was that the Little Englanders were 
 simply asserting in their extreme way that in any sound colo- 
 nial policy even a mother country had rights. In the 
 eighteenth century England losti her American colonies be- 
 cause she insisted on taxing them ; but there have been times 
 during the present century when it seemed as if the other half 
 of the epigram might be true — that she would lose the re- 
 mainder of her colonies because she would not allow them to 
 tax her. The right of the mother country to control her own 
 affairs is the idea for which the Little Englanders stood. They 
 objected, first of all, tO' the political system which necessi- 
 tated preferences ; secondly, to the continuance of the pre- 
 ferences after that political system had practically come to an 
 end ; and, thirdly, to a state of affairs in which the preference 
 to English goods was largely nominal, while the burden of the
 
 ^•^ 
 
 14: COMMERCIAL POLICY. 
 
 colonial preference was very real. ^ They perceived, more- 
 over, that, in the discussion of trade policy, considerations 
 which they regarded as extraneous were drawn from the colo- 
 nial interests, and that these interests, wath the Com Laws, 
 constituted the chief bulwark of the protectionist system. The 
 triumph of free trade may be said to have been the triumph 
 of Little Englandism ; but the Little Englanders of the middle 
 of the century were not a section of the nation but the whole 
 nation. It was not merely the free traders but the opponents 
 of free trade, like Disraeli, who used the language the colo- 
 nies came to resent so bitterly. Little Englandism was a 
 phase of political thought ; and luckily it is now a past phase. 
 But it marked a great advance in the conception of a colonial 
 pvolicy. It is readily enough admitted that it represented an 
 advance in political policy, for to it the colonies owe respon- 
 sible government. But it was also an advance in commercial 
 policy. A system which makes one part of an empire suffer 
 to benefit another can never be regarded as an ideal. Reci- 
 procity in disadvantage is not a sound system. The colonial 
 preferences did a great deal to create in England a dislike for 
 the colonies. The English consumer undoubtedly suffered 
 heavily by them ; and thus there arose a powerful party de- 
 manding the abolition of these preferences, and prone in the 
 heat of argument to denounce a connection which made 
 such sacrifices necessary. The great obstacle to imperial 
 federation during the last quarter of a centun,^ has been the 
 impression in England that the colonies would make their 
 assent to the scheme conditiona^l on the granting of pre- 
 ferences to colonial goods in the English market. The Cana- 
 dian preferential tariff of 1897 removed this impression, and 
 
 1 It was estimated in the Reoort of the Committee on Import Duties, 1840, that the 
 colonial preference in the EngfUsh market cost the English consumer from ^^5, 000,000 
 to ^8.500,000 a year ; and the supposed compensation through the operation of the 
 Navigation Laws was contemptuously set asicie by McCulloch with the remark that 
 the English public had to consume bad lumber in order to employ bAd ships.
 
 COMMERCIAL POLICY. 15 
 
 thus maxks a definite stage in the evolution of a colonial 
 policy. 
 
 The triumph of free trade was not the end of the old 
 colonial policy, but it was the beginning of the end. The 
 English government removed the restrictions and granted free 
 trade to the colonies. They were left free to buy and to sell 
 vhere they chose; but at first they were not left entirely to 
 their own devices. The repeal of the Navigation Laws marks 
 the triumph of free trade, but not the triumph of freedom. 
 The colonies were granted freedom from restrictions on their 
 trade, but they were not granted freedom of choice. Indeed, 
 we may doubt whether, if the English government had fore- 
 seen the use to which they would put their freedom, it would 
 have been as generous and confiding as it was. The removal 
 of the restrictions might have been made conditional. All 
 England, however, was absorbed in the idea of free trade 
 triumphant. Cobden's prophecy, which we all remember and 
 for which every little man despises him, was but one expres- 
 sion of the prevalent opinion. Other nations must be left to 
 be convinced by the logic of events : the conversion of the 
 colonies England proposed herself to take or keep in hand. 
 She had of her own free will removed from their trade the 
 restrictions she herself had imposed, but she did not regard 
 them as emancipated from her authority. When they erred 
 from the free-trade path of rectitude, she chid them, not 
 always gently, and sometimes with unnecessary vehemence. 
 
 After 1850 England no longer showed herself anxious for 
 colonial reform. Before the free-trade era she had almost 
 forced commercial reform upon the colonies : she had insisted 
 upon the removal of the restrictions upon their trade. The 
 interests affected by the restrictions were few, and the great 
 majority of the population of the colonies were indifferent to 
 them. The colonists agitated for responsible government, and 
 thev fought to maintain their preferences in the English
 
 «W55?!?!P^" 
 
 16 COMMERCIAL POLICY. 
 
 market or to increase them ; but they troubled themselves 
 little about the restrictions. But after tha triumph of free 
 trade, the reforms came as the result of colonial demands. 
 When England granted the colonies control of their own 
 affairs, she granted them, as they claimed, the right to regu- 
 late their tariffs according to their own ideas. They were 
 willing to accept the freedom from restrictions, but they were 
 not converted to free trade. They used their freedom to 
 establish protection for their own industries ; and though Eng- 
 land first rebuked and then protested, in the end they had 
 their own. way, and England somewhat sullenly acquiesced. 
 The colonies based each new demand upon the principle of 
 responsible government ; and English statesmen slowly recog- 
 nized that the freedom of choice which had been granted to 
 the colonies involved freedom toi choose the evil as well as 
 the good. Where responsible government has not been 
 granted, the colony or dependency has not yet the power to 
 frame its own tariff according to its own ideas. The Crown 
 colonies are free traders because England is a free trader. 
 When India ventured to impose on manufactured cotton a 
 tax which was probably in effect protective, there was a 
 violent protest from Lancashire ; and when the government 
 changed, the permission which had beenj granted by a former 
 secretary was withdrawn. The old spirit is still there ; and 
 had it not been for the grant of responsible government, which 
 the colonies owe to the Little Englanders, even what are now 
 the self-governing colonies might not have been allowed to 
 frame their own tariffs according to their own conceptions of 
 their needs. As it is, they have step by step achieved com- 
 plete freedom ; and to-day their commercial policy is admitted 
 to be entirely their own affair. 
 
 II. Effect upon the Colonies. 
 The changes in the commercial policy of England towards
 
 COMMERCIAL POLICY. 17 
 
 ner colonies after the War of Independence have been traced 
 from the point of view of English administration : it remains 
 now to describe the effect of these changes on the colonies. 
 The system of restrictions died hard. It had taken more than 
 a century to grow to maturity, 1650 — 1775 ; and it took almost 
 exactly the same length of time to disappear, 1775 — 1897. 
 Fallacies which have been embodied in legislation are hard to 
 uproot, because interests have been created whose prosperity 
 depends on the continuance of the system. Although the 
 colonial policy had been exposed by Adam Smith, and dis- 
 credited by the unexpected commercial results of the inde- 
 pendence of the revolted colonies, it was not at once 
 abolished. Burke had explained the acquiescence of the 
 American colonists in the old colonial policy, at least till 1764, 
 by the fact that 
 
 the Act of Navig-ation attended the colonies from their infancy, grew 
 with their growth and strengthened with their strength. They were 
 confirmed in obedience to it even more by usage than by law. They 
 scarcely remembered a time when they were not subject to sucli 
 
 restraint ; "^ 
 
 and the same psychological law may be used to explain whv 
 a part of the discredited system so long maintained itself. A 
 few writers demanded its immediate abolition ; but at first it 
 was merely modified and the changes came only as practical 
 concessions to the exigencies of a war period. Each succes- 
 sive change was in turn denounced as a radical departure from 
 a time-honored policy,- and the changes were almost wrung 
 from the British government by the inexorable pressure of 
 events. The concessions were therefore temporary in charac- 
 ter and Hmited in application ; and the various statutorv 
 amendments merely gave legislative sanction to practices 
 which had grown up outside the law. No system was obsen-ed 
 
 'Speech on American Taxation, pag^e 383. 
 *See i>i/ta, pp. 29-30.
 
 18 COMMERCIAL POLICY. 
 
 in the policy pursued by the government, and necessity was 
 the only law. ^ But when peace was restored, there came an 
 opportunity to take wider views of things and to apply the 
 lessons of experience. Then reforms came thick and fast; 
 and they were inspired by as definite a purpose as had been 
 the enactments of the old colonial system which they were 
 intended to destroy. By 1850 — by 1826 according to Hali- 
 burton — the work of reform was practically complete. There 
 remained but few restrictions on the trade of the colonies ; 
 and these were of a political character, and were afterwards 
 removed for political reasons. 
 
 There were four stages in the passing of the old colonial 
 system. At first particular concessions were made to the 
 necessities of the colonies during the war period ; and at 
 intervals the sphere of their application was widened and 
 sanctioned by imperial legislation. Then, after the peace, 
 systematic reforms were carried out, culminating either in 
 Huskisson's modification of the Navigation Laws in 1826 or 
 in the final repeal of those laws in 1850. These reforms 
 aroused little interest in the colonies, because the restrictions 
 that were removed had caused no serious inconvenience. 
 Then came, in the forties, the period during which, to the 
 great indignation of the colonists, the colonial preferences in 
 the English market were attacked and finally removed from 
 the statute book. The last period is from 1850 onwards, when 
 the remaining restrictions, which affected the political free- 
 dom rather than the commercial prosperity of the colonies, 
 were removed as occasion demanded, after representations 
 from the colonies and generally in opposition to the ideas and 
 policy of the mother country. 
 
 The restrictive system cannot, on the whole, be said to have 
 
 '^C/. Merivale, Lectures on Colonization, preface, pp. v-vi. "During: the conti- 
 nental war and for many subsequent years our colonial empire had been administered 
 after no very regular pattern but in accordance with certain received usages."
 
 COMMERCIAL POLICY. 19 
 
 borne hardly on the colonies after the War of Independence. 
 They were restricted to the English market, it is true, but 
 they would naturally have bought and sold there. So far as 
 the interests of England were concerned, the criticism which 
 Brougham passed on the regulations of the colonial system 
 before the war may with more truth be applied to the regula- 
 tions of the period under discussion. 
 
 The prohibitions or discouragements [he said] given to certain kinds 
 of colonial industry have been rather superfluous than burdensome. 
 They have generally been framed with a view to prevent that which 
 was never likely to happen. 
 
 Or, as he said later, of the more purely trade regulations : 
 
 Here again the restrictive policy has only secured by a superfluous 
 and harmless anxiety that arrangement which would of itself have 
 taken place if things had been left to their natural course. ' 
 
 On the West Indies the system did bear hardly, but the ad- 
 vantage accrued to Canada and the continental colonies, and 
 not to England; and as early as 1794 Canada had reciprocity 
 in inland trade with the United States. The complaints re- 
 garding the restrictions were few in number and were not the 
 expression of wide discontent ; they were protests on the 
 score that liberty, not prosperity, was denied. The great and 
 obvious advantages of the compensating preferences recon- 
 ciled the colonies to these restraints. - 
 
 The restrictive system, as it had been in operation before 
 the war, consisted of three parts : the monopoly of colonial 
 buying and selling ; the prohibirion and discouragement of 
 
 1 Brougham, An Inquiry into the Colonial Policy, etc., vol. i, pp. 140-246. 
 
 iA British American League was founded in Montreal m 1850, in protest against 
 the abandonment of colonial interests ; and at one ot the meetings a speaker declarsd 
 that he did not regret the change, because the trade policy of the mother country could 
 not altogether harmonize wiih the interests of the colonies, though so long as 
 redprocaJ benefits were given it was tolerable.
 
 t.«a^'!^p^f:«^^pw^?^^;w!5'^*^>^. ' -'^ 
 
 20 COMMERCIAL POLICY. 
 
 colonial manufactures ; and the Navigation Laws. There 
 never was the slightest tendency in the colonies to develop 
 manufactures which were likely to come into competition with 
 English manufactures. The " line of employment," as 
 Brougham pointed out, " most profitable to the inhabitants of 
 all new settlements is . . . the raising of raw produce " ;^ 
 and the effect of the whole system in Canada was to stimu- 
 late the raising of produce and the development of rudimen- 
 tary manufacturing industries. In the West Indies, where the 
 English settlements were older, the restriction upon manu- 
 facturing did damage the colonies. Upon the West Indian 
 sugar plantations it was possible to refine or clay sugar econo- 
 mically, with but small addition to the machinery used for 
 boiling cane juice; but this, in 1803, the planters were prac- 
 tically forbidden to do. In the interest of the English sugar 
 refiners — who, according to Brougham, consisted of about fifty 
 families, mainly foreigners — a duty on the exportation of re- 
 fined sugar was imposed, which was practically prohibitive,^ 
 But the West Indies were not in favour during this period, 
 and consequently little heed was paid to their protests. 
 
 The Navigation Laws, on the other hand, proved a great 
 advantage to the colonies. The monopoly of the colonial 
 market was no real hardship, because England was the natural 
 market for colonial buying. The wars of the period made the 
 colonists more than ever dependent on the home market ; and 
 though here and there some suffered, the suffering was in- 
 dividual. On the other hand, the monopoly of the produce 
 of the colonies, combined as it was with preferential duties 
 in the English market, was a great apparent benefit ; and the 
 destruction of the monopoly was a cause of discontent so 
 
 ' op. et he. cit. 
 
 'i/bid., vol. i, page 241. "The French Islands have always been free from this 
 oppression, and owed a considerable share of their former prosperity to so eminent an 
 advantage."
 
 COMMERCIAL POLICY. 'J I 
 
 great that it gave rise to disloyal mutterings, and sometimes 
 to loudly expressed threats of seeking annexation to the 
 United States or, at least, independence. It is important, too, 
 to remember that the purely restrictive part of the system was 
 the first to be abolished ; while the differential duties were 
 maintained for fully twenty years longer. The memory of 
 these restrictions had almost entirely faded before the dif- 
 ferential duties were seriously reduced ; and what the colo- 
 nists meant by " the abandonment of the old trade principles 
 of England under which she had flourished for centuries''^ 
 was the abolition of the part which benefited them. They 
 naturally forgot that the greater part of the old colonial 
 system had disappeared without protest from them, and that 
 the appeal to an established policy was futile when the re- 
 formers were demanding that the same privileges of unpre- 
 judiced importation as had been conferred on the colonists 
 should be extended! to the British consumer. In 1794, by 
 Jay's Treaty, Canada had been granted the right to import 
 from the United States ; even the West Indies, in one round- 
 about way or another, had acquired the right ; and naturally 
 the English consumer felt that he ought to have the same 
 freedom. Sir Robert Peel declared on one occasion that the 
 colonies should be treated as if they were counties in Eng- 
 land ; the reformers practically claimed that the counties in 
 England should be granted the privilege, already held by the 
 colonies, of buying in the cheapest markets. 
 
 The North American; colonies that remained British had 
 been subject, before the War of Independence, to the same 
 restrictions as the colonies that revolted ; but the restrictions 
 had not occasioned the same annoyance. The industrial de- 
 velopment of the Canadian colonies was not great ; and the 
 
 1 British American League Declaration f 1850). Cf. Resolution moved by Mr. now 
 Senator) Wark in New Brunswick House of Assembly, March 18, 1850: "That 
 British colonies, having- been reared up under a commercial system by which the 
 productions of the various parts of the Empire enjoyed national protection in their 
 respective markets." etc.
 
 '••^ 
 
 22 COMMERCIAL POLICY. 
 
 pressure of the system could be felt only where there was 
 some measure of industrial development. There was little 
 need for restriction ; and the comparative scarcity of regu- 
 lations regarding Canadian commerce and industry indicates 
 that even the government recognized the fact. In 1766 Lieu- 
 tenant-Governor Francklin of Nova Scotia was directed to 
 make report regarding the development of industries in that 
 colony ; and in a letter to the Earl of Shelbume he wrote : 
 
 I cannot omit representing- to your Lordship on this occasion that 
 this government has at no time given encouragement to manufactures 
 which could interfere with those of Great Britain ; nor has there been 
 the least appearance of any association of private persons for that 
 purpose ; nor are there any persons who profess themselves weavers 
 so as to make it their employment or business, but only work at it in 
 their own families during winter and other leisure time. It may be 
 also proper to observe to your Lordship that the inhabitants of this 
 colony are employed either in husbandry, fishing or providing lumber, 
 and that all the manufactures for their clothing and the utensils for 
 farming and fishing are made in Great Britain. ' 
 
 In the same year Governor Francklin, writing for instructions, 
 made a report and proposals to the government in London 
 regarding the Cape Breton coal mines ; but his proposals did 
 not meet with approval, for he was informed, under date of 
 December 2, 1776, that 
 
 his Majesty would not at present authorize or permit any coal mines 
 
 to be opened or worked in the island of Cape Breton, and 
 
 that all petitions and proposals for that purpose should be dismissed.' 
 
 For some reason or other the coal deposits in Cape Breton 
 had, before this, caused anxiety to the home government ; 
 for in 1768 the governor was instructed to forbid the work- 
 ing of the coal deposits in Cape Breton ; and later, while the 
 
 'Quoted by Campbell, History of Nova Scotia, page i6i 
 ■2 Brown, History of Cape Breton, pag^e 364.
 
 COMMERCIAL POLICY. 23 
 
 colonial administration was enjoined to assist, to the extent 
 of its ability, the Loyalists desirous of settling in the colony, 
 it was aJso specially instructed to see that no land grants 
 were made to them in Cape Breton. On the whole, how- 
 ever, the government seems to have encouraged the growth 
 of such manufactures as the colonies developed spontaneously. 
 In 1785 we find Governor Parr reporting to Lord Sydney that 
 there were ninety sawmills in the colony of Xova Scotia, of 
 which twenty-five had been erected since 1783. Though the 
 English government had tried at the outset to discourage any 
 tendency to develop linen and woollen manufactures, bounties 
 for the production of hemp were repeatedly given. This was 
 part of the policy, afterwards more fully developed, of look- 
 ing to the continental colonies as sources of naval supplies. 
 In 1787 the Xova Scotia Assembly requested Lord Sydney, 
 through Governor Parr, to renew the bounties on hemp and 
 timber; and in 1801 the Duke of Pordand forwarded in- 
 structions to the governor of the colony to encourage the 
 growth of hemp. For hemp and for timber for masts there 
 was a constant demand in England. The industry of ship- 
 building, for which, as subsequent history showed, the mari- 
 time colonies had great natural facilities, was encouraged by 
 the Navigation Laws ; for these e.xcluded all ships built in 
 New England, where even greater facilities then existed. The 
 New England colonies, according to Mr. Fiske, could build 
 much more cheaply than the English yards, in the ratio of 
 $38 to $50 or $60 per ton; and at the time of the Revolution 
 fully one-third of the British ships afloat had been built in 
 New England. The exclusion of ships built in the United 
 States greatly diminished the supply, and this was the oppor- 
 tunity of the Canadian colonists. 
 
 Adam Smith had declared that the separation of the Ameri- 
 can colonies, while politically undesirable, might be an evil 
 which could be tolerated, provided the separation were
 
 '^ 
 
 24 COMMERCIAL POLICY. 
 
 effected without war and an advantageous treaty of commerce 
 were concluded between them and the mother country. Un- 
 fortunately his pacific prognostications were not realized ; but 
 for! a time there was some probabilit}-, even after the war, 
 that his views about commerce might prevail. Oswald, who 
 negotiated the treaty of peace from the English side, was a 
 friend and disciple of Adam Smith; and one clause in the 
 draft treaty proposed that 
 
 the British merchants and merchant ships, on the one hand, shall 
 enjoy in the United States, and in all places belonging to them, the 
 same protection and commercial privileges, and be liable only to the 
 same charges and duties, as their own merchants and merchant ships ; 
 and, on the other hand, the merchants and merchant ships of the 
 United States shall enjoy in all places belonging to his Britannic 
 Majesty the same protection and commercial privileges, and be liable 
 only to the same charges and duties, [as] British merchants and mer- 
 chant ships, saving always to the chartered trading companies of 
 Great Britain such exclusive use and trade [in] their respective posts 
 and establishments as neither the subjects of Great Britain nor any 
 of the more favored nations participate in.^ 
 
 This clause was rejected by the English ministry on the 
 ground that the English representatives had no authority to 
 interfere with the Navigation Laws. In the same year 
 Pitt introduced a bill to secure unconditional free trade 
 between England and the United States ; but Lord Sheffield's 
 views prevailed. Had Adam Smith, through Oswald or 
 through Pitt, been able to carry out his views, colonial policy 
 for the next half century would have been a much simpler 
 matter. But Lord Sheffield, who, through one much-quoted 
 sentence, has come to be regarded as the representative of 
 the old colonial policy, had on his side the inertia of a cen- 
 tury of mercantile legislation; and in July, 1783, the Navi- 
 gation Acts were applied to trade between the United States 
 
 1 Wharton, Diplomatic Correspondence of the American Revolut'on, vol. v, 
 page 807.
 
 COMMERCIAL POLICY. 25 
 
 and the British West Indies. Goods from the United States 
 could be imported from the state of origin — a piece of 
 gratuitous insolence which the United States were not in a 
 position to resent, though it called attention to the imperfect 
 character of their union. England's position was strong : she 
 would grant nothing except for a quid pro quo, and the United 
 States had nothing to offer. They could not buy elsewhere 
 so profitably as in England, and the West Indian trade had 
 been their mainstay before the Revolution. Congress more- 
 over was too weak to levy duties on English goods ; and 
 separate action by the individual states only made matters 
 worse. ^ 
 
 But the disadvantage was not all on one side. The advan- 
 tages of commerce are mutual ; and if the United States lost 
 trade, the West Indian islands, cut off from their natural 
 market, suffered extremely. Relaxations had to be made in 
 the Navigation Laws as early as 1787, when free ports were 
 created in Jamaica and other islands,-^ and the islands were 
 permitted to carrv' on trade with all foreign colonies in vessels 
 of one deck — a provision which really permitted a roundabout 
 trade with the United States. These relaxations, however, 
 were by no means sufficient. The British North American 
 colonies were quite unable to perform their share of the 
 traffic ; and, after many protests from the West Indies, both 
 nations came to reason and recognized the mutual advantage 
 derived from trade. The strictness of the Navigation Laws 
 was therefore further relaxed by Jay's Treaty. American ves- 
 sels not exceeding seventy tons burden were allowed to trade 
 with the islands on the same footing as that on which British 
 
 iln the circumstances the truth of the following opinion is obvious: "The 
 commercial advantages [of the Jay Treaty] were not very considerable ; but they at 
 least served as an entering- wedge, to quote Jay's expression, and they were pro tanto 
 a clear gain to America." — Pellew, John Jay, c. 2. 
 
 227 Geo, III, c. 27; made perpetual, 32 Geo. Ill, c. 37; and amended, 33 Geo. 
 Ill, c. so.
 
 m.>?^^*^W^- ^'^^^W^f^!?'' 
 
 26 COMMERCIAL POLICY. 
 
 vessels were placed by 23 George III., chapter 39, or by 
 annual orders in council. 
 
 Jay's Treaty marks a substantial advance of the British 
 colonies towards commercial freedom. The West Indies were 
 the greatest gainers. Canada's vexatious monopoly of the 
 West Indian trade w-as somewhat restricted ; but in return she 
 gained freedom to import and export, by road, river, lake or 
 canal, whatever she pleased from and to the United States. 
 The territory of the Hudson's Bay Company was naturally ex- 
 cluded from the scope of the treaty, because the Americans 
 would thus have been granted privileges denied to British sub- 
 jects. In the case of Canada the treaty wasi perpetual ; in 
 the case of West Indies the clauses w^ere to cease to operate 
 two years after the conclusion of a treaty of peace in Europe. 
 The maritime continental colonies were apparently excluded 
 because their trade with the United States was not conducted 
 overland ; but in their case the strictness was relaxed by 
 annual orders in council, which were periodically renewed and 
 extended in each case before the current period had expired.^ 
 
 The probable reason for the relaxations was the war with 
 France, which not only stopped the roundabout trade between 
 the West Indian islands and the United States and rendered 
 trade between Canada and the islands more than ever irregu- 
 lar, but also withdrew from the island trade many of the 
 British vessels which had been engaged in it. The navy was 
 unable to provide the necessary convoys, and colonial trading 
 ships were liable to capture by French ships of war and priva- 
 teers, vt-hich swarmed in the Caribbean Sea. This risk of 
 capture, and the superior profits to be obtained by hiring 
 v'essels to the government for the transport of troops, induced 
 English merchants to with^lraw from this branch of the carry- 
 ing trade. - 
 
 iSee New BrunswicU Royal Gazette, paxsitn. 
 
 ■^\t the end of the war. according- to an estimate made by Mr. Huskisson 
 (Speeches, vol. iii, page 17), there were discharged from the navy 1236 vessels ok
 
 COMMERCIAL POLICY. 27 
 
 The concessions under Jay's Treaty gave no adequate re- 
 lief ; for these concessions were hedged round by so many 
 conditions that trade was not even so free as it was intended 
 to be. Under these circumstances the governors of the West 
 Indian islands, relying on subsequent indemnification from 
 Imperial Parliament, felt themselves forced, in direct and 
 flagrant violation of the Navigation Laws, to sanction the 
 direct trade with the United States ; and while the war lasted 
 the trade continued without protest. But when the war closed 
 with the Peace of Amiens, the British shipping interests 
 sought to take up the old trade which they had abandoned. 
 The concessions under the Jay Treaty had still two years to 
 run ; but against the open violation of the Navigation Laws 
 by the West Indian governors the British traders could and 
 did protest. These protests were readily entertained ; for it 
 happened, as a crowning misfortune, that at the beginning of 
 Pitt's second administration the assembly of Jamaica was at 
 variance with the imperial government. In 1804 Lord Cam- 
 den wrote to the governor of Jamaica and the governors of 
 the other islands, instructing them 
 
 not to open the ports of the islands over which they presided for 
 the admission of articles from the United States which were not 
 allowed to be imported by law — except in cases of real and very 
 gfreat necessity. 
 
 The illegal permission was accordingly revoked ; but there was 
 such a violent protest that permission had to be further ex- 
 tended for six months, though on this occasion for lumber and 
 grain only. The remonstrance of the Jamaica Assembly 
 showed how completely the Navigation Laws had been super- 
 seded ; for it stated that not one-twelfth of the imports came 
 
 270,382 tons which had been hired as transports ; and in addition 333 vessels of war of 
 93.350 tons were sold by the naval authorities, because adapted to other purposes than 
 those of war. Thus nearly i6oo vessels, or one-fourth of the Eng-lish marine before 
 the outbreak of the war, were withdrawn from the merchant service ; and considering- 
 the reduced efficiency of what remained, it was no wonder that ships were lacking for 
 the dangerous West Indian trade.
 
 28 COMMERCIAL POLICY. 
 
 from British North America, that six-sevenths of the imports 
 from the United States were carried in American shipping, 
 and that, if the ports were closed, 456 British ships employ- 
 ing 2862 seamen must at once be available to avert ruin and 
 disaster. As the ships were not available, nor likely to be 
 available — for war had again broken out — the permission was 
 extended. The governor of the Windward Islands saved him- 
 self ail this trouble by declaring that the keeping of the ports 
 open was a " real and very great necessity." 
 
 In spite of the extended permission, there was great scar- 
 city in Jamaica ; and in the early months of 1806 a petition 
 was presented to Lord Nugent, the governor, showing 
 
 that the suspension of our late intercourse with the United States of 
 America must render a further supply of the above-mentioned 
 necessary articles [chiefly lumber and provisions] very scanty and 
 precarious, it having been abundantly proved by upwards of twenty 
 years' experience that the British colonies are altng-e'her inadequate 
 to furnish our wants, and in times of war supplies in Briti'.h bottoms 
 from the United States cannot be in any measure relied upon ; . . . 
 in many parishes there is not a sing-le barrel of flour or meal or 
 bushel of gfrain for sale. ^ 
 
 The prayer of the petitioners was granted, and the whole 
 question of colonial trade was in consequence brought up in 
 the Imperial Parliament. The necessity of an open trade, 
 which by one means and another had continued for thirteen 
 years, was recognised. It had been continued in open viola- 
 tion of the statutory law of the empire ; and it was obviously 
 
 IDispatch dated from King-ston. Jamaica. May 21. 1806. to the New Brunswick 
 Royal Gazette. The R'>val Gnzette, down to the year 18 jy. was not merely an official 
 advertising' org'an but a g'eneral newspaper, which vindicated its official title by dealing; 
 only with In haute politique. It is invaluable as a source of information regarding 
 the early history of Canada and all matters concerning colonial policy; and its natural 
 official bias renders the information it supplies regarding the evil effects of the 
 colonial policy absolutely trustworthy.
 
 COMMERCIAL POLICY. 29 
 
 inexpedient to allow the colonial governors to use their dis- 
 cretion in setting aside that law by proclamation or by order 
 in council. The English Government sought to regularize the 
 practice of past years, and to relieve the colonial governors 
 from the responsibility' to which they had been exposed of 
 periodically suspending the Navigation Laws. In introducing 
 the bill, the chancellor of the exchequer admitted the absolute 
 necessity of open trade to prevent suffering and disaster in the 
 West Indian islands. 
 
 The shipowners [he said] in consequence of the discretion thus re- 
 posed in the j^overnors had been exposed to a degree of uncertainty 
 destructive to their real interests. With respect to the islands it was 
 essential not only to their prosperity but to their security that they 
 should be supplied where local circum-^tances rendered the assistance 
 they received most abundant and regular. During the ten or twelve 
 years, when a different system was pursued, instances of distress had 
 occurred, the bare mention of which would excite the most painful 
 sensations; and common humanity had led the administration for the 
 last thirteen years to abandon the former rigid system both in peace 
 and war. So far were the continental establishments of this coun- 
 try across the Atlantic from being capable of supplying the British 
 islands [i.e., the West Indies] that at one period they were found 
 inadequate to their own subsistence.^ 
 
 The bill was in appearance a great breach in the old policy, 
 but in reality it injured no interest. However, it encountered 
 violent opposition in and out of Parliament ; and long after 
 the bill had been passed the British shipowners attributed to 
 it all their distresses. It certainly impaired their monopoly of 
 the West Indian trade ; but since they had deserted the island 
 service for the more lucrative employment of transporting 
 troops, it was hardly rational to expect that the colonists 
 should starve till it suited the shipowners to resume the trade. 
 
 iDebate in House of Commons, April ai, i8o6 ; quoted ia New Brunswick 
 Royal Gazette, June 9, 1806.
 
 30 COMMERCIAL POLICY. 
 
 At the best they could not supply the colonies ; and, as Sir 
 Francis Baring declared in the same debate, it would have 
 been " dangerous and cruel as well as impolitic to trust to 
 them at the risk of starving thousands should they fail in the 
 attempt." But the opposition was not based on any regard 
 for the interests of the West Indies. The Navigation Laws 
 were attacked and the conservative instinct was roused in 
 their defence. The master of the rolls, in the course of the 
 debate, said that this bill, 
 
 with a force and conciseness beyond all example, strikes out of your 
 statute books or reduces to a dead letter all the body of the laws of 
 this realm made for the support of our navigation, the rule of our 
 colonial system and everything that depends on both ; 
 
 and he further insinuated that the bill " contained a meaning 
 and had an object which they did not think fit to disclose to 
 Parliament." The general argument was that " this was the 
 first relaxation of the Navigation Laws enacted by Parha- 
 ment." As a matter of history, this was not the case; for the 
 Navigation Laws had been frequently in part suspended in 
 time of war, and more than once in time of peace; and in 
 the preamble to an act of 1802 (42 George IIL, chapter 80), 
 it was declared that the commerce of the country had greatly 
 benefited by such relaxation.^ 
 
 This act and the discussion had reference primarily to the 
 West Indian colonies; but it was not long before similar re- 
 laxations were granted to the maritime continental colonies 
 also. The Canadas had, under the Jay Treaty, practical free- 
 dom of trade, so that there was no question of their position. 
 The maritime colonies continued to receive the same right 
 periodically by proclamation, till in 1809 a law was enacted . 
 permitting freedom of trade in certain specified commodities 
 
 "Cobbett's Parliamentary Debates, vol. vii. Cf. Annual Register, 1806, page 89.
 
 COMMERCIAL POLICY. 31 
 
 between New Brunswick and Nova Scotia and the United 
 States, in any vessel or ship whatsoever, till March 25, 181 2 ; 
 and by an order in council, transmitted by Castlereagh in the 
 previous year, certain ports in these colonies were practically 
 made free ports. ^ In October, 1811, before the act of 1809 
 had expired, another order in council extended permission, 
 till further no'tice, to export in any vessels except those of 
 France, to ports of the United States of America to which 
 British vessels were not admitted, all articles the produce or 
 manufacture of the British Isles or the colonies, under cer- 
 tificate that such articles had been imported in British ships ; 
 and to import from such ports of the United States wheat and 
 grain, bread, biscuit, flour, pitch, tar and turpentine.-' 
 
 In this order in council we have traces of the notorious con- 
 tinental system, with its orders in council, its Berlin and Milan 
 decrees, and the consequent embargo and non-intercourse acts. 
 The effect of these measures was, on the whole, a benefit to 
 Newfoundland and Canada. Of course trade with the United 
 States did not cease because of the embargo ; and the mari- 
 time ports became to a certain extent, as the order in council 
 evidently intended they should become, entrepots for the trade 
 between England and the United States. The West Indies 
 suffered a great deal, and in some cases offered bounties on 
 the imports of food-stuffs.^ But in the West Indies, as a 
 speaker in the House of Commons said in 1824, " distress was 
 the habitual condition and prosperity the exception";* and 
 at a time when war was imminent between England and the 
 United States the distress was likely to be regarded as an 
 
 iHaliburton, History of Nova Scotia, vol. i, page 249. 
 
 2New Brunswick Rovil Gazette, January 13, 1812. 
 
 3New Brunswick Royal Gazette, March 2. 1812. contains a copy ot such a 
 proclamation by the Governor of Gaudeloupe. July i, .811, by which bounties, in some 
 cases specific, in others ad valorem, are offered for six months and until three months 
 notice shall have been given. 
 
 *Huskisson, Speeches, vol. ii, page 367.
 
 82 COMMERCIAL POLICY. 
 
 incident of the war. The northern colonies prospered greatly 
 during the embargo period and during the war. They were, 
 as we saw, used as entrepots, and they secured a large share 
 of the fish trade to the Mediterranean and to South America. 
 " The war made the fortunes of Newfoundland merchants. 
 Fish were smuggled into Spain through Portugal, and New- 
 foundland merchants had the whole Peninsular market and 
 Italy without a rival." ^ Intercolonial trade received an im- 
 petus. Newfoundland obtained a large part of its food sup- 
 plies from British North America.- The mother country also 
 was forced to import from Canada many goods previously 
 supplied by the United States. Wheat was exported in con- 
 siderable quantities, and Canadian lumber in large quantities. 
 Six hundred lumber ships loaded at Quebec in 1810, and saw- 
 mills, many of them operated by steam, sprang up everywhere. 
 With the War of 18 12 all treaties lapsed, and there was 
 a free field for constructive legislation. But the treaty of 
 commerce in 181 5 practically restored the condition of affairs 
 before the war, except that an attempt was made to demand 
 reciprocal concessions from the United States. There was to 
 be equality of all charges upon the ships belonging to either 
 country in the ports of the other, and a hke equality of duty 
 upon all articles the production of the one country, imported 
 into the O'ther, whether such importation was made in the 
 ships of the one or of the other. ^ This convention was re- 
 newed in 18 18 for a period of ten years ; but it did not work 
 easily. It was a case of pouring new wine into old bottles ; 
 
 iProwse, History of Newfoundland, pag-e 395, note. 
 
 ^The British Provinces "supplied all the lumber, cattle, butter, oats, corn, hay, and 
 other produce that had always been procured from America. Of course they could 
 not supply all the flour that was required, but it shows vhat progress they were 
 making' that, out of 85,000 cwt. of bread and flour, British America supplied 
 Newfoundland in 1813 with nearly 12,000 cwt. ; and also with 1400 oxen, 1400 sheep 
 and 2i million feet of board." — Prowse, op. cit., page 393. 
 
 ^Convention of 1815, art. ii. Treaties and ConventioQS ot the United States, 
 page 345.
 
 COMMERCIAL POLICY. 33 
 
 and the modifications of the Navigation Laws did not har- 
 monize with the old principles which had remained unmodi- 
 fied. The new reciprocal system operated to the prejudice of 
 British shipping. American ships could use English ports as 
 entrepots — and the more profitably on account of the extension 
 of the warehousing system ; but English ships were liable to 
 seizure if they imported into the United States any article not 
 the produce of the United Kingdom. The United States was 
 hampered by the convention in the control of its own tariff. 
 The protectionist spirit had increased during the war, and 
 attempts were made to raise the duties on certain articles 
 which as that period were manufactured only by England. 
 The result was a further suspension of intercourse (1820) be- 
 tween the United States and the West Indies ; and this con- 
 tinued till in 1822 an act was passed by which American ships 
 were allowed to trade directly between the United States and 
 the West Indies and North American colonies. 
 
 The systematic reform of the Navigation Laws ; the repeal 
 of the preferences granted to the colonies ; and the gradual 
 removal, in the latter half of the present century, of the re- 
 strictions which prevented the colonies from framing an in- 
 dependent commercial policy — these changes have still to be 
 examined.
 
 ( 34 ) 
 
 CHAPTER 11. 
 
 ENGLAND'S COMMERCIAL POLICY TOWARDS HER 
 COLONIES SINCE THE TREATY OF PARIS. 
 
 THE reform of the Navigation Laws, which began with 
 Wallace's measure in 1822, was the inception of a 
 systematic reform, culminating in Huskisson's measures in 
 1826, which practically swept away all the burdensome restric- 
 tions that affected the trade of the colonies and gave them 
 freedom to develop. The partial modifications had worked so 
 ill that it became necessary to reconsider the whole policy and 
 to adapt it to the changed circumstances of the political, com- 
 mercial and colonial world. When the Navigation System was 
 established, the competitors of England were all European 
 nations : Asia, Africa and America were merely spheres of 
 colonization, for a share of whose commerce the different 
 European nations competed. On these continents there were 
 no maritime nations whose power was feared. As the number 
 and the area of the independent nations extended in these 
 continents, the colonial sphere contracted. The situation in 
 the first decades of this century, when the Portuguese colony 
 of Brazil and then the Spanish] colonies of South America 
 asserted their independence, was analogous to the situation 
 which existed when the United States achieved their indepen- 
 dence. " Great Britain had no choice but to apply the Euro- 
 pean principles to the commerce and navigation of Brazil^ 
 though out of Europe,"^ and consequently later to the com- 
 merce and navigation of Colombia and Buenos Ayres and the 
 rest. 
 
 One of the new states which had arisen since the inception 
 
 ^Huskisson, Speeches, III, page 27.
 
 COMMERCIAL POLICY. 
 
 of this navigation policy was a much more dangerous naval 
 competitor than any of the European states. Yet it was pre- 
 cisely to this power that the greatest concessions had been 
 made in the way of departure from the strict principles of the 
 Navigation Laws. It is true that the concessions were due to 
 the exigencies of war, thus violating the rule which England 
 herself had tried to enforce in the Seven Years' War. But 
 when once the concessions had been made, colonial interests 
 forbade their withdrawal ; and a foreign nation was thus ad- 
 mitted to a share of England's colonial trade. The United 
 States had applied to English trade the same policy which 
 England had in 1785 applied to American shipping, by refus- 
 ing to consider the British colonies as integral parts of the 
 British Empire — a piece of insolence which could be paral- 
 leled only by England's insult in 1785.^ 
 
 The aim of the Navigation Laws had been relative, not 
 absolute, power. A nation endeavoured to engross as much of 
 the world's traffic as it could, and then sought to prevent any 
 other single country from engrossing too great a share of what 
 remained. From the nations of Europe England had no 
 longer anything to fear; but, in defiance of the Navigation 
 Laws, she was favoring above all other nations the United 
 States, and thus allowing a large share of the trade she her- 
 self could not engross to be carried on by her most dangerous 
 maritime rival. The remedy obviously could not be sought in 
 a return to the older and unmodified policy. In particular, 
 the interests of the West Indies forbade such a solution. 
 British shipping simply could not supply the needs of the colo- 
 nies ; and the relaxation of the old system was essential to 
 the prosperity and to the very existence of these colonies. 
 The remedy therefore lay in admitting European nations to 
 the English colonial trade, in order to prevent the United 
 States from engrossing the West Indian trade. Thus 
 
 iHuskisson, Speeches, passim.
 
 36 COMMERCIAL POLICY. 
 
 the islands would be at once relieved from their depen- 
 dence on one sole market, which had been twice closed to 
 them by war and at least twice by political measures ; and 
 at the same time the supremacy of the United States in these 
 waters would be qualified. This policy was in the true line of 
 the Navigation Acts, preserving their spirit while modifying 
 their letter to suit the altered circumstances of the case. 
 
 The conditions were altered, not merely because new 
 nations had risen up beyond the Atlantic or because England, 
 having practically no industrial rival, no longer attributed so 
 much importance to the idea of relative power, but also be- 
 cause from one reason or another men could no longer naively 
 assume that colonies existed to be exploited. The causes of 
 the change in the EngUsh sentiment have been suggested; 
 but the most important of them was the fact that the colo- 
 nists were becoming strong enough to make their influence 
 felt. The continental colonies had benefited greatly by all the 
 incidents cf the commercial policy of the war. They had a 
 preference in the English market, because England had a 
 quarrel with the Baltic powers ; and the War of 1812 had for 
 a time given them a monopoly of the Mediterranean market 
 and had restored to them their m_onopoly of the West Indian 
 market. The country was better settled, communications had 
 been opened up and industry was developing. They naturally 
 turned, therefore, to politics and to agitation against what 
 they conceived to be grievances. The greater part of their 
 energy was devoted to the struggle for responsible govern- 
 ment, which turned mainly on the question of the control of 
 the crown duties. These were nominally collected to regulate 
 commerce, and against this purpose they had little to say ; but 
 the revenue could hardly be said to be within their control, 
 for the amount derived from the duties imposed under the 
 act of 1825 was ^75,000 a year, and of this ^^68,000 was ex- 
 pended in paying crown officers appointed by the home
 
 COMMERCIAL POLICY. 37 
 
 government^ to secure the regulation of colonial commerce. 
 In the long run, the grant of responsible government was the 
 ground of the colonial claim to complete control of their own 
 tariffs ; but in the early decades of the century the politicaJ 
 restrictions naturally drew their attention from those which 
 were more ostensibly commercial. They had some energy left, 
 however, to protest against even thei slight injustice which 
 these limitations caused. In 1809 Sir Erasmus Gower, 
 Governor of Newfoundland, reported to the home govern- 
 ment that there were evidences of discontent with the colo- 
 nial restrictions : 
 
 It is eig^hteen years since I was first on this station, and the great 
 improvements and changes that have taken place in that time render 
 it now absolutely necessary that the capital of this colony should no 
 longer be cramped, cabined and confined by laws and restrictions, 
 which at present are entirely unsuited to its conditions and progress.^ 
 
 From 1810 onwards they protested against the restrictions 
 to which they were subjected. It is true that their protests 
 were incidental and were directed against grievances which 
 were in the main sentimental ;^ but they served to show 
 how the wind was blowing. The main protests continued to 
 come from the West Indies, where the grievance was not 
 merely sentimental and where the restrictive system, with all 
 the relaxations granted, not only handicapped them in their 
 competition with newer sugar islands, but also subjected 
 them periodically to the dangers of dearth and famine. 
 
 These were the changes in circumstances which, accord- 
 ing to Huskisson, demanded a modification of the Navigation 
 
 ' McCulIoch, Dictionary of Commerce, article " Colonies, " pajjc ;?37. 
 
 sProwse, History of NewfoundLinJ, pp 383-384. 
 
 3 In April. 181 1, the Assembly of Nova Scotia protested agrainst the practice of 
 prosecuting- breaches of the Imperial revenue laws in the court of the Vice-.\dmiralty 
 at Halifax, and adopted a string- of resolutions condemning the practice as a great 
 grievance and as betraying a want of confidence in the people of the province.— 
 Haliburton, Nova Scotia, I, 288. 
 
 42a347
 
 38 COMMERCIAL FOLICY. 
 
 Laws ; and the changes were so generally recognized that he 
 could treat a return to the old system as an impossible alter- 
 native. What remained to be done, in his view, was to throw 
 open the colonial ports to the ships of all nations, reserving 
 only the intercourse between the mother country and the 
 colonies, which was to be treated as a coasting trade. The 
 freedom of trade was, however, to be granted on reciprocal 
 terms only; and the imports were still to be subject to the 
 crown duties intended to give a preference to the produc- 
 tions of the mother country in the colonial market and to 
 those of the respective colonies in the markets of each other. 
 McCulloch claimed that the conditions and regulations in- 
 troduced were, for the most part, in direct contradiction of 
 the principles laid down by Huskisson himself.^ But 
 McCulloch was a polemical free trader, while Huskisson was 
 a statesman making the first steps towards free trade; and 
 the acts of 1825 and 1826 mark an enormous advance in 
 both commercial and colonial policy. The concessions made 
 to the colonists were that the casual relaxations of the system 
 made in favor of trade with the United States were regularized 
 and made permanent, and that these relaxations were granted 
 to all other nations on the same terms as to the United 
 States. Free ports were created in the various colonies and 
 the privilege of warehousing was extended. The preferential 
 duties in favor of the mother country were not abolished ; 
 but, in place of absolute prohibition of many articles, an 
 ad valorem duty was established, and the act of 1826 (which 
 simply consohdated two acts of 1825) significantly includes, 
 not a list of enumerated articles which might be imported, 
 but a brief table of restrictions. 
 
 " It is not to be dissembled that this is a great change in 
 our colonial system," said Huskisson ;- but he claimed that 
 
 1 McCulloch, op. et. art. cit., pag^e t^^t,. 
 ^Huskisson, Speeches, II, -jiS.
 
 COMMERCIAL POLICY. 39 
 
 great benefits to both the mother country and the colonies 
 would ensue from it. Since the consequences of the Treaty 
 of Paris had borne out all that Adam Smith had said about 
 the advantages of open trade and the disadvantages of mono- 
 poly, there had been other instances of prosperity resulting 
 from the opening up of trade, to which he could appeal as 
 precedents justifying the change he proposed. In 1813 the 
 East Indian trade had been thrown open, with a result which 
 proved, he said, " as the history of all modern commerce 
 proves, that wherever you give a free scope to capital, to 
 industry, to the stirring intelligence and active spirit of ad- 
 venture . . . you are in fact opening new roads to entei- 
 prise."^ He had another precedent in the restrictions on 
 the Irish trade. 
 
 An open trade, especially to a rich and thriving country [he con- 
 cludes], is infinitely more valuable than any monopoly, however 
 exclusive, which the public power of the state may be able either 
 to enforce agfainst its own colonial dominions or to establish in its 
 intercourse with other parts of the world.' 
 
 In addition to these commercial advantages, which the re- 
 lease of the colonial trade would bring to the mother country, 
 he believed that political advantages in her relations to the 
 continental colonies would also accrue. They would connect 
 their increased prosperity with the liberal treatment, and 
 would " neither look with envy at the growth of other states 
 on the same continent, nor wish for the dissolution of old and 
 the formation of new political connexions." These were the 
 advantages to the mother country which he foresaw, and he 
 relied on this general argument to prove that the concessions 
 should be extended to the West Indian islands. He con- 
 sidered a supposed objection, that the privileges need not 
 have been extended to the West Indies, because " they can- 
 not help themselves, however rigid the rules of monopoly or 
 
 l/»:rf., II, 320. "^Ibid. II, 321.
 
 -^ 
 
 40 COMMERCIAL POLICY. 
 
 dependence " under which they may be placed ;^ and an- 
 swered it by asserting that at no time since the independence 
 of the United States had it been found possible to enforce 
 the statutory- restrictions, and that to attempt to do so would 
 expose the islands to the greatest distress and would injure 
 the shipping interests which opposed his reforms. 
 
 From all the experience which we can collect from the conduct of 
 this country in respect to Ireland and to its colonies — from all that 
 we witness of what is passing in the colonies of other states, I come 
 clearly to the conclusion that so far as the colonies themselves are 
 concerned, their prosperity is cramped and impeded by the old sys- 
 tem of exclusion and monopoly; and I feel myself equally warranted 
 in my next inference, that whatever tends to increase the prosperity 
 of the colonies cannot fail, in the long run, to advance in an equal 
 degree the general interests of the parent state. '^ 
 
 This is his general argument ; but in the case of the con- 
 tinental colonies he found other reasons, based upon the 
 industrial conditions in the colonies. Without these conces- 
 sions, he feared, they would not continue tO' be able to meet 
 the competition of the United States. The war had brought 
 great prosperity to the maritime colonies, because it had 
 given them a practical monopoly of the great markets for 
 fish ; but after the war there had been considerable distress, 
 because, being handicapped by the Navigation Laws, which 
 forbade them to take return cargoes, the Nova Scotia fisher- 
 men could not meet the competition of the United States in 
 neutral markets. 
 
 These were the arguments which, in the teeth of the oppo- 
 sition of the shipping interests, carried through the first great 
 modification of the colonial system. It was carried almost 
 amid the indifference of the colonies. Canada was content 
 with a colonial system which gave her the English market for 
 timber, and she resen-ed her reforming zeal for constitutional 
 
 iHuskisson, Speeches, III, no. I -fbid., II, 313, 314.
 
 COMMERCIAL POLICY. 41 
 
 questions. The colonists were gratified that the restrictions 
 were removed, though they had not been seriously incon- 
 venienced by them. Practically, all that any one had ever 
 contended for was thus granted them, and with scarcely a 
 pause they resumed their agitation for responsible govern- 
 ment. Those, only who were in opposition to the popular 
 demand saw great significance in Huskisson's reforms. Hali- 
 burton wrote : 
 
 Thus ended colonial monopoly, and with it, it is to be hoped, those 
 ungenerous feeling's which led many persons in Great Britain to 
 suppose that although members of the same Empire their interests 
 were distinct from ours ; that any benefit derived to us from an inter- 
 colonial trade was an indirect disadvantage to them ; and that the 
 poverty of the colonies which that very monopoly created, while it 
 rendered us sometimes burthensome and often importunate, was a 
 reason for viewing us rather in the light of needy dependents than 
 good customers. 
 
 The benefit of this extension of trade, and the soundness of the 
 principle on which it is founded, will soon appear in the increase of 
 the national shipping — in the impulse given to colonial enterprise — 
 in the growing demand for British manufactures and in more punc- 
 tual remittances. ' 
 
 HaJiburton's amiable hope that this was the end of the 
 " ungenerous feelings " was not to be realized ; for this reform 
 of Huskisson's, with the prosperity which came to the colo- 
 nies in consequence, was only the starting point and the 
 occasion for greater virulence on the part of those whom we 
 now revile as Little Englanders. The colonial monopoly had 
 not coma to an end, but only that part of it which could 
 with any reason be said to benefit the mother country. The 
 colonial preferences in the English market still remained ; 
 but it was argued that what was beneficial to the colonies 
 would surely be beneficial to the mother country in the end, 
 
 iHaliburton, History of Nova Scotia, II, 388.
 
 42 COMMERCIAL POLICY. 
 
 Whatever principles may have been involved, Huskisson's re- 
 form was justified by the result. Trade expanded and pros- 
 perity increased. There was at first some difficulty with the 
 United States, with whose objections to reciprocity McCulloch 
 expressed his sympathy ; and the result was another suspen- 
 sion of intercourse. Reports were made to the Senate of the 
 United States early in 1826, condemning Huskisson's acts as 
 "giving too little and asking too much.'' 
 
 . . . The commitlee are not aware that any great advantage is to 
 be derived to the commerce of the United States in making British 
 colonial ports places of entrepot for the warehousing and trans- 
 shipment of merchandize to be received from, or imported into, the 
 United States, when it could probably be both brought and carried, 
 without resort to them, directly to its ultimate destination with less 
 cost and greater benefit ; more especially when such ports are sub- 
 ject to exclusion without their previous knowledge or concurrence, 
 as is recently demonstrated to be the case with regard to Halifax in 
 Nova Scotia.^ 
 
 This difficulty about the reservation of the intercolonial 
 trade was not completely removed till the Navigation Laws 
 were finally repealed ; but a compromise was patched up, and 
 trade was renewed on reciprocal terms in 1830, when Eng- 
 land modified some of the colonial duties which were intended 
 to promote intercolonial trade ; and in that year the benefits 
 of the acts of 1825 and 1826 were realized by the West 
 Indies. But when this quarrel had beeni adjusted, the trade 
 of the colonies grew.- They imported more than ever from 
 the mother country, but their imports from foreign countries 
 increased even faster. They exported to foreign countries 
 that surplus which the United Kingdom could not take (and 
 in this concession the West Indies found a certain means of 
 
 1 Report to U. S. Senate, January 25, 1826, quoted in the New Brunswick 
 Royal Gazette, March 21, 1826. Halifax, an open port, had been closed, "in mid- 
 winter and without notice, on an extremely hazardous and inclement coast.' 
 
 -McCulloch, op. et art. cit., page 333.
 
 COMMERCIAL POLICY. 43 
 
 tiding over the crisis caused by the emancipation of the 
 slaves) ; and colonial ships traded to all parts of the world. 
 So great was the development that a wnriter in the Quebec 
 Gazette, apparently in 1837, tried to account for the slower 
 progress of Canada, as compared with the United States, by 
 referring to the old restrictive system. 
 
 From 1784 to the present time, our neigfhbours have had the free 
 range of the world, going- and coming; while the colonies, until a 
 comparatively recent period, were confined to the trade with the 
 mother country and with the other colonies.* 
 
 Ten years later the governor of Nova Scotia wrote to Earl 
 Grey, the colonial secretary ; and his report is the final justi- 
 fication of Huskisson's reforms. 
 
 Prior to 1824, the foreign trade of Nova Scotia was very limited, 
 but the changes in the commercial policy of the empire, suggested 
 and carried through by Mr. Huskisson, opened a wider field for 
 colonial enterprise, of which the North Americans were not slow to 
 avail themselves. With every relaxation yielded by the Imperial 
 Parliament, the foreign commerce of the colonies has attained a 
 further development, and Nova Scotia vessels, besides their traffic 
 with the neighbouring states, Canada and the West Indies, now trade 
 to the Baltic, the Mediterranean, China, the {sic\ Maritius, the East 
 Indies, the Brazils and the \sic\ Havanah ; and our merchants and 
 mariners are fast acquiring an accurate acquaintance with distant 
 seas and with foreign markets in every part of the world. 
 
 With this report he sent a tabular statement (in part repro- 
 duced on p. 44, note), which showed, by a comparison of 
 the trade of 1827 with that of 1847, the extent of this de- 
 velopment. 
 
 With Huskisson's reforms the restrictions on the external 
 trade of the colonies ended. There remained the preferen- 
 tial duties in their tariffs in favor of English manufactures : 
 
 'Quoted in Martin's Colonies.
 
 44 COMMERCIAL POLICY. 
 
 the important fact that the opening of trade depended on 
 reciprocal concessions, the value of which was adjudged by 
 the Imperial Parliament ; and the classification of the trade 
 between the colonies and the mother country as a coasting 
 trade. The preferences in favor of the mother country im- 
 posed no great burden on the colonies. England exported no 
 food stuffs, and could manufacture more cheaply than any 
 other nation ; and the colonies could have regarded the 
 abolition of these preferences with profound indifference, had 
 they not known that this act of apparent self-denial was but 
 a prelude to the abolition of what they valued — the colonial 
 preference in the English market. The complete repeal of 
 the Navigation Laws — thus opening the colonial trade to all 
 nations, irrespective of reciprocal concessions — was not re- 
 garded as a boon, but in fact nearly drove the North Ameri- 
 can colonies to the verge of revolt, if words meant anything. 
 In 1 84 1 the Imperial duties at colonial ports were reduced 
 and the prohibitions entirely removed; and in 1846 the colo- 
 nial legislatures were authorized to repeal all the differential 
 duties which had been imposed in the colonies to favor 
 British produce and to encourage British and colonial shij>- 
 ping. The speech from the throne at the opening of the 
 Imperial Parliament in 1847 suggested that this freedom 
 should be exercised for the benefit of the consumer. 
 
 NoTB {c/. p. 43). — Imports into Nova Scotia (including Cape Breton)y>-om 
 
 
 United Kingdom 
 
 British Possessions U.S. and Foreign Ports 
 
 Total 
 
 1827 
 
 £307,907 
 
 £190,309 £312,603 
 
 £810,819 
 
 1847 
 
 33o.9'S 
 
 220,550 480,489 
 Exfiorts from Nova Scotia to 
 
 i.o3i>9So 
 
 
 United Kingdom 
 
 British Possessions U.S. and Foreign Porta 
 
 Total 
 
 1827 
 
 £121,617 
 
 £107,738 £36,922 
 
 £267,277 
 
 1847 
 
 71.804 
 
 446,006 5i3'2S9 
 Shipping (tons) cleared for 
 
 831,071 
 
 
 United Kingdom 
 
 British Poseesaiona U.S. md Foreign Ports 
 
 Tot»J 
 
 i8a7 
 
 22,615 
 
 100,324 «o,874 
 
 123.813 
 
 1847 
 
 67,049 
 
 149,524 199,880 
 
 416,463 
 
 See also Porter, Progress of the Nation, pp. 796 et seq.
 
 COMMERCIAL POLICY. 45 
 
 The colonial, legislatures took different courses of action in 
 the matter of repeal. In Canada, in 1847, Mr. Cayley intro- 
 duced a budget which did away with protection to British 
 products, as compared with foreign, and in place of the old 
 crown duties substituted duties for revenue, without any dis- 
 tinction as to the source of the goods. Nova Scotia followed 
 the same course; but New Brunswick — pathetically loyal to 
 the last — maintained in her tariff of 1848 a discrimination in 
 favor of the mother country and the other colonies, amount- 
 ing in some cases to three or four hundred per cent. ^ 
 
 The final repeal of the Navigation Laws, instead of being 
 welcomed, was the occasion of great distress and serious dis- 
 content in the seaboard colonies of the North American conti- 
 nent. The act of 1849 repealed Huskisson's definition of the 
 direct trade between the mother country and the colonies and 
 of the intercolonial trade as a coasting trade, and threw open 
 the whole carrying trade of the British Empire to the com- 
 petition of the world. This destroyed the advantage which 
 the North American colonies had enjoyed in the West Indian 
 trade; and in 1851 a further blow seemed to be struck at 
 colonial prosperity, when the colonial preference on timber, 
 already greatly reduced, was cut in half. This double blow 
 at their prosperity was the signal for a great outburst of dis- 
 loyalty and discontent. In Montreal and St. John the e.xcite- 
 ment rose to the pitch of frenzy. The mother country had 
 cast them over, and they saw nothing but ruin staring them 
 in the face. The repeal was, however, probably what the 
 colonies needed most. It threw them on their own resources 
 
 'Journal of New Brunswick House of Assembly, March 28, 1848. The following 
 are some of the items : 
 
 
 Eng. and Coloi 
 
 lial. 
 
 Foreign, 
 
 Eng. I 
 
 &nd Colonial. 
 
 Foreiji 
 
 
 £ s. d. 
 
 
 £ s. d. 
 
 
 
 
 Butter, per cwt. 
 
 4 6 
 
 
 9 
 
 Boots 
 
 aX 
 
 30% 
 
 Cattle 
 
 100 
 
 
 a 
 
 Carriages 
 
 4% 
 
 30% 
 
 Clocks, each 
 
 5 
 
 
 IS 
 
 
 
 
 Sugar, per cwt. 
 
 S 
 
 
 10 
 
 N. E. S. 
 
 4% 
 
 .5%
 
 46 COMMERCIAL POLICY. 
 
 and made them realize the duties as well as the privileges of 
 responsible government. The ruin that was imminent did not 
 come, because they set to work to avert it; and the threat 
 of ruin was ultimately the industrial salvation of the colonies. 
 
 The human mind [says Leroy Beaulieu] is so constituted that it will 
 not have recourse to heroic measures until the situation is clear and 
 definite. It will not depart from routine nor make full use of all its 
 resources until it has seen all other hope of safety disappear. * 
 
 This truth was abundantly illustrated in the case of the colo- 
 nies after their desertion by the mother country. There was 
 a good deal of immediate distress and suffering ; but it worked 
 out right in the end. A contemporary New Brunswick ob- 
 server, writing a quarter of a century later, said that the 
 danger turned out to be more illusory than real ;- but it was 
 averted because the energy of the colonists was called out. 
 When they found that their appeals and protests were dis- 
 regarded and that the English market was no longer to be 
 their preserve, they began to set their house in order and to 
 accommodate their business methods to the new conditions. 
 The possession of the preference had encouraged unbusiness- 
 like ways and a spirit of dependence on governments. Hence- 
 forth they talked less politics and devoted them^-^lves to 
 trade; and even the lumber industry was probably not less 
 profitable in the face of competition than it had been in the 
 days of the preference, although undoubtedly it was no longer 
 so easy.^ 
 
 iDe la Colonization, (zme idit.). page 203. 
 
 'Fenety, Political Notes (First Series), pag-e 329. 
 
 'Owing to wasteful methods of securing the lumber, " it is doubtful whether the 
 trade was more profitable than it is at present, notwithstanding the enormous pro- 
 ductiveness of the forests and the advantage which New Brunswick and the other 
 colonies then had in the markets of Great Britain."— James Hannay, Life of Sir L. 
 Tilley, page 40. There was another side to this prosperity, as the first minister at 
 Pictou, Nora Scotia, pointed out. " But the grand cause of our depravation is the
 
 COMMERCIAL POLICY. 47 
 
 The immediate effect, however, was to daunt the bravest 
 and the most loyal- It had been argued in England that the 
 removal of the restrictions, by encouraging the enterprise and 
 rousing the industry of the colonies, would increase their re- 
 sources, and would thus enable them in a shorter time to 
 throw off the yoke and effect their separation from the mother 
 country. But it was the immediate distress, rather than the 
 ultimate prosperity, which threatened tO' make for separation. 
 Public opinion, whether in the legislative a.'^semblies, in public 
 meetings or in the press, was disloyal. The expression of 
 discontent was participated in by the staid, solid and sober 
 members of the community, always famous for their conser- 
 vatism and strong attachment to everything English.^ An 
 
 shutting' up of the Baltic. If the Devil contrived it tor the ruin of our morals, he is a 
 master in politics ; for it were hard to contrive a more effectual scheme for that 
 purpose. . . . Ever since that event, ships, sailors, money and spirituous liquors 
 with their attendant evils, have been pouring in among us continually. The great 
 demand for timber has in a manner caused us to lay aside farming, our most innocent, 
 and in the long run our most proiitable earthly employment, and g'vo ourselves up to 
 the felling, squaring, hauling, rafting, and selling of timber to the ships, and the 
 squandering of inoney . . . The prosperity of fools destroys them . . ." And the 
 biographer of this minister explains with more restraint the effect of the demand for 
 colonial timber. " It might have been expected that such prosperity would at least 
 have had an important influence upon the improvement of the coimtry. But it would 
 be difficult to find in any land an example of such prosperity leaving so few permanent 
 results for good even upon its material progress. Farming retrograded. The f.\rmers 
 went to the woods for timber, and left their farms to neglect. The land was thus 
 depreciated by having the valuable timber removed from it without its being cleared 
 or rendered tit for the plough ; while a ruinous system of farming impoverished the 
 land already under cultivation. The farmer thought only of hastily committing his 
 seed to the ground in spring, and of removing the crop in harvest, and paid no atten- 
 tion to manuring, rotation, or other improved systems oi agriculture. ... In this 
 way the farms became thoroughly exhausted, and the evils of this state of things have 
 continued to the present day (1859), both by the improper system of farming, which is 
 not even yet entirely abolished, and by the bad reputation which the country gained 
 as to its capabilities for agriculture. The merchants, partly owing to the system of 
 credit, and partly owing to the changes which took place in the lumber market, nearly 
 all failed .... and the country came out of a season of commercial prosperity, such 
 as it has never since seen, with exhausted resources." (Patterson : .Memoir of the 
 Rev. James MacGregor, D.D., of Pictou. Nova Scotia, pp. 369-371). This is an 
 unexpected picture of the results of a really effective English preferential tariff in tavour 
 of colonial produce, but it can hardly be regarded as greatly exaggerated. 
 ' Fenety, op. cit., page 329.
 
 48 COMMERCIAL POLICY. 
 
 address in favor of annexation to the United States, prepared 
 in Montreal and signed by 325 mercliants of tliat city, rested 
 its complaint on " the most disastrous effect " which the 
 " reversal of the ancient policy of Great Britain " had upon 
 Canada ; and although outside of Montreal there was not 
 much favor shown to the annexation idea, language equally 
 strong was employed to denounce the selfish policy of the 
 mother country. At a joint meeting of the British-American 
 League and the Colonial Association of New Brunswick it 
 was resolved : 
 
 That tha commercial evils now oppressing the British-American 
 provinces are to be traced principally to the abandonment by Great 
 Britain of her former colonial policy, thus depriving them of the 
 preference previoasly enjoyed in the British market, without securing 
 advantages in any other market. 
 
 That these colonies cannot remain in their present position without 
 the prospect of immediate ruin and that it is the duty of the Imperial 
 Government either first to restore to the colonies a preference in the 
 British markets over foreign goods, or second to have opened to them 
 the markets of foreign countries, and more especially the United 
 States upon terms of reciprocity. 
 
 The resolutions proposed by Mr. (now Senator) Wark, to 
 which reference has already been made, deserve quotation, 
 not simply because they express clearly the discontent in New 
 Brunswick, which suffered especially from the changes, but 
 because they indicate clearly the restrictions to which the 
 colonies were still subject, and to* the removal of which the 
 energy of the colonists was directed, as soon as they had 
 given up the vain hope that their protests might avail to 
 change the English policy. The colonists had as yet, he 
 claimed, neither the full power of regulating their tariff nor 
 the right to enter into commercial treaties with foreign 
 countries ; and he demanded a further extension of the 
 powers of the colonial legislature to accomplish these ends.
 
 COMMERCIAL POLICY. 49 
 
 His resolutions were not adopted ; but those which were 
 substituted for them recognized the necessity that new 
 markets should be opened up, and formulated clearly the 
 demand for a reciprocity treaty with the United States. 
 
 There can be no doubt that the changes effected in 1849 
 and 185 1 did practically threaten the industries which had 
 grown up in Canada during the first half of the century. The 
 colonists claimed that the change was an outcome of the 
 tendency to promote the manufacturing at the expense of the 
 colonial interests of England ; and the difficulty of effecting 
 the reform, with the distress and discontent it caused, is but 
 another instance of the political danger of creating " in- 
 terests '' by the manipulation of tariffs. The colonists had a 
 strong case for consideration. They could have shown that 
 the system of preferential duties had originated in the poli- 
 tical and naval necessities of the mother country and that the 
 benefit to the colonies was an afterthought, emphasized by 
 those in authority to reconcile freemen to a system of political 
 slavery which was a benefit to office-holders only. While ad- 
 mitting that it had given prosperity and industrial develop- 
 ment to the colonies, they could have argued that it had 
 tended to restrict their industrial development to one line and 
 had hindered the natural diversification of industrv*. Adam 
 Smith may have been right, when he said that bounties on 
 colonial timber assisted in the clearing of the land ; but a 
 system of such excessive preferences as had been established 
 had manifestly no such tendency, because lumbering remained 
 so profitable that agricultural development was checked. The 
 net results were: (i) the prosperity of the country was made 
 to depend on one industry, which was naturally subject to 
 fluctuations, according to the seasons, and did not therefore 
 encourage a true industrial spirit; (2) the prosperity of this ;' 
 industry in Canada was subject to the caprices and interests i 
 of a legislative power over which the colonies could exercise ;
 
 50 COMMERCIAL POLICY. 
 
 no legislative control ; (3) although the colonies had a pre- 
 ference in the English market, their lumber had, so long as 
 that preference was substantial, been subject to heavy duties 
 at home — with the result, according to the showing of Eng- 
 lish Parliamentary committees, that a fluctuation of price in 
 the English market to the extent of five per cent, meant a 
 fluctuation of thirty per cent, in the colonies; (4) although 
 they had protested against these fluctuations, they were being 
 ruined by the removal of so ambiguous a benefit, because 
 that industry, the creation to a large extent of Parliamentary 
 preference, was their sole support. 
 
 Most of these allegations could have been supported by 
 reference to the Journals of the House of Commons. The 
 benefit of the preferences was real enough, but at the same 
 time an artificial direction and concentration was given to the 
 industry of the country. Had the maintenance of the pre- 
 ferences been within their own control, this artificiality would 
 have been a trivial matter in comparison with the real bene- 
 fits of the preference ; but it was dependent on the breath of 
 English opinion, which had changed. 
 
 Still, a great deal of consideration was actually shown for 
 colonial interests by English statesmen. The colonial pre- 
 ferences were the last portions of the old colonial system to 
 be removed. Down to i860 the colonies enjoyed a preference 
 of 45. a load on timber, which ought to have been suflScient 
 to counterbalance the longer journey. The preferences were 
 not all at once abolished, and the colonists had ample warn- 
 ing to set their house in order ; so that, had it not been .for 
 the acquired Micawber instinct of waiting for the government 
 to do something, they would not have been left in the lurch 
 at the last. 
 
 The case of the West Indies was harder. They had suf- 
 fered more from the other parts of the colonial system ; and 
 yet, even when the preference was highest, they had derived
 
 COMMERCIAL POLICY. 51 
 
 little real benefit from it. The monopoly granted to the West , 
 Indian planter, said Huskisson,i was of little or no advan- \ 
 tage to him. ' 
 
 By conquests made during: the last war, by cessions obtained at 
 the last peace, you have extended your sugar colonies in such a 
 degree that the quantity they now send to this country exceeds by 
 60,000 hogsheads (about one-fifth of the whole supply) the con- 
 sumption of this country. This excess must be sold in the general 
 market of Europe. The price which it will command in that market, 
 It IS obvious, must be regulated by the rate at which other sugars of 
 hke quality (those of Cuba, Brazil and the East Indies) can be 
 afforded in the same market. It is equally obvious that the price of 
 this excess must determine the price of the other four-fifths consumed 
 m the United Kingdom. The monolopy, therefore, affords little if 
 any substantial advantage to those upon whom it is conferred. They 
 must be able to produce sugar in competition with the foreign 
 grower. 
 
 The abolition of the preference was, nevertheless, a hard 
 blow to the West Indies. The preference hadi encouraged 
 them to confine themselves to the cultivation of a single 
 staple, for the production, of which they were by no means so 
 well suited as were the competitors they now had to meet. 
 From this blow they never recovered, because they were not 
 able, as were their fellow-sufiferers in the continental colonies, 
 to turn their energies to other fields; and at the present 
 moment there is a strong demand— and little likelihood— 
 that m some form or other the preference in the English 
 market may be restored to them. The whole history of the 
 preferential duties is one long warning against an attempt 
 to give an artificial direction to industry. ^ 
 
 THuskisson. Speeches. Ill, ..4. Cf. also III, 603: - Much as the West India 
 planters have been, trom time to time, promised, nothing has as yet beea done for 
 mem. 
 
 f ul'^'^'\ history of the preferential duties is represented in tabular torm below. The 
 timber and sugar duties are taken as typical ; but these, though the most imporUnt. 
 were not the only preferences enjoyed. In 1840, according to Porters evidence before
 
 52 COMMERCIAL POLICY. 
 
 The act of 1846 has generally been regarded as the close 
 of the period of commercial regulations ; and doubtless it 
 was, for practical purposes. But there still remained certain 
 restrictions on the commercial freedom of the colonies. The 
 removal of the restrictions was, as has been said, a triumph 
 rather of free trade than of freedom. The English govern- 
 ment did not propose to allow the colonies to mar the example 
 which England was offering to the world, and accordingly it 
 
 the famous Import Committee of that year, there were 82 differential duties in favor 
 of colonial products ; by 1853 all of these but the preferences on timber, food, wine and 
 spirits had disappeared ; and in i860 the last, the timber duty, was abolished. 
 1798 Colonial timber was admitted free till 1798, when it was charged 3°/, 
 
 1803 ad valorem ; but there was practically no importation till 1803, when the 
 1806 duty stood at 2s. a load. This duty was abolished in i8o6. Owing- to diffi- 
 culties with the Baltic powers, a large addition was made to duties on Baltic 
 's ^ r '''"ber in 1809, and in the following year these duties were doubled. After 
 the failure of Napoleon's Russian campaign, when the Baltic ports were 
 1813 again opened, an addition of 25'/, was made, not from military necessity, but 
 to favour the colonic;s ; although the result was still further to decrease 
 1821 Baltic shipping. This continued to 1821, when a duty of los. a load was 
 imposed on colonial timber, and the duty on foreign reduced from 65s. to 
 555. In 183 1 an attempt was made still further to reduce the colonial pref- 
 erence, but ineffectually ; and the Whig government in 1841 was equally 
 1842 unsuccessful. Peel successfully dealt with the subject in his first budget, 
 and ag:ain in 1843 ; and in 1846 changes were proposed, to take effect in 
 1848 two stages, 1847 and 1848, at which date the preference had been reduced 
 1851 to 15s on foreign and is. per load on colonial. The preference was in 1851 
 i86o again reduced by half, and finally in i860 the duties were equalized at is. a 
 load on foreign and colonial timber alike. — Down to 1S41 the duty on 
 foreign sugar was prohibitory and the imports practically nothing. In that 
 year the Whig ministry proposed to reduce foreign sugar from 65s. per cwt. 
 to 36s., the duty on colonial remaining at 24s. per cwt. ; but their proposal 
 was rejected on the ground that it granted favours to slave products. Peel, 
 
 1844 in 1844, admitted foreign sugar, the product of free labour in China, Java 
 and Manila, at an intermediate rate of 355. 8d., the duties on foreign slave- 
 
 1845 grown being 66s. 2d. In the next year the duties on all classes were 
 reduced and stood at 63s., 23s. i,d. and 14s. ; and provision was made that 
 by 1851 colonial sugar should be reduced to 105., and that in 1854 all 
 
 1846 rates were to be equalized. But in 1846 the Whig ministry abolished the 
 distinction between slave-grown and free-grown, and reduced the duty on 
 all foreign sugar to 21s. per quintal, which was gradually to be reduced 
 to 14s. in 1851, when all preferences were to disappear. In 1848, however, 
 in consequence of protest, the time of protection to colonial sugar was 
 
 1854 extended three years, to 1854, in which year all preferences disappeared, 
 though the sugar duties continued till 1874.
 
 COMMERCIAL POLICY. 53 
 
 desired to keep the colonies in subjection to the ideas of the 
 mother country. 
 
 The benefits [wrote Lord Grey in 1849 to Sir Edmund Head] 
 ^¥hich are expected to arise from this policy [that is, free trade] will 
 be greatly increased through its general adoption by the principal 
 nations of the world, which Her Majesty's government hope to see 
 eventually brought about. But it would materially interfere with the 
 attainment of this happy result if it should be observed by foreign 
 countries that the former and narrow policy of endeavouring, by 
 bounties or restrictions, to divert capital and industry to other than 
 their natural channels, was again adopted with Her Majesty's assent 
 in any part of Her Dominion. ' 
 
 To many in the colonies it seemed, and perhaps still 
 seems, that the mother country was pursuing her own in- 
 terests at the expense of the colonies. Mr- Wark, in his 
 resolutions, claimed that the manufacturing interests of the 
 mother country were being advanced at the expense of the 
 colonial interests ; that England had no longer any need for 
 restrictions to secure her own market, and was interested in 
 having the world's markets thrown open to her; and that, 
 for the sake of the example to foreign countries, she was still 
 prepared to sacrifice the interests of the colonies, or what 
 seemed tO' the colonists tO' be their interests. The colonies 
 were not yet free, but were still mere conveniences to serve 
 the ends of the mother; country. England had abandoned 
 specific restrictions, but she still maintained the restrictive 
 system. If there were any in England who believed that, be- 
 cause specific restrictions might have weighed on the colo- 
 nies, they would welcome the principles of free trade, they 
 were speedily undeceived ; for the colonists at once began to 
 claim the right to manipulate their tariffs in ways quite con- 
 trary to the principles of free trade. This brought them into 
 
 IDispatch 170, December 4, 1849, Journals of New Brunswick House, 1850.
 
 54 COMMERCIAL POLICY. 
 
 conflict with the home government, which still thought to 
 regulate colonial ideas. 
 
 The restrictions on the freedom of the colonists, stated 
 briefly, in the order in which they came up fori discussion, 
 were three : (i) They were denied the right to favor their own 
 industries, by means of import duties or by bounties; 
 (2.) they were not free to enter into reciprocity treaties with 
 other colonies or with foreign countries ; and (3) they were 
 bound by Imperial treaties, in the framing of which they were 
 not consulted. These three restrictions have been removed : 
 the first in 1859; the second in 1868 for Canada, in 1873 
 and 1895 for the Cape and the AustraHan colonies ; the 
 third, partially in 1881 and finally in 1897. 
 
 In 1842 the last tariff was framed for the colonies ; and in 
 the following year it was conceded by speakers in the Eng- 
 lish House of Commons that Canada possessed the exclusive 
 right to regulate her own tariff. ^ But when the colonies 
 began to exercise this right according to their own ideas, the 
 home government protested and instructed colonial governors 
 not to give their assent to bills which were- contrary to free- 
 trade principles. The Assembly of New Brunswick sought to 
 establish a bounty on hemp, and the colonial secretary re- 
 buked the Assembly for their ignorance of economic prin- 
 ciples as well as for their presumption. So well known were 
 the sentiments of the home government, and so thoroughly 
 was it recognized in the colonies that they were prepared to 
 enforce these sentiments, that in 1849 Mr- Hincks, the in- 
 spector-general of Canada, in introducing a free-trade budget, 
 declared that tO' establish a protective system in Canada 
 would be tantamount to a declaration of independence. He 
 referred to Lord Grey's dispatches ; and he asked what in- 
 ducement England would have in keeping up any connection 
 with Canada, if the colony deprived her of the power of 
 
 iTodd, Parliamentary Government in the British Colonies, page 177.
 
 COMMERCIAL POLICY. 55 
 
 trading with them. In this Mr. Hincks showed that he 
 understood the temper of the mother country, for nothing 
 has retarded the growth of the Imperial Federation idea in 
 England so much as the existence of protective tariffs in the 
 colonies. But apparently neither Lord Grey nor Mr. Hincks 
 was aware of the strength of the protectionist sentiment in 
 the colonies, or of the logical importance of the grant of 
 responsible government. The colonies simply ignored the 
 protests of the home government; and against their invin- 
 cible determination— or, as the free traders at home might 
 have said, against their invincible ignorance— the home 
 government could not prevail, except at the risk of disorga- 
 nizing the colonies altogether The grant of responsible 
 government carried with it the control of fiscal affairs accord- 
 ing to their own ideas ; and in the end the power of logic 
 prevailed. In 1856 the principle was distinctly enunciated, 
 in the revised edition of the " Rules and Regulations for Her 
 Majesty's Colonial Service," that 
 
 the customs establishments in all the colonies are under the control 
 and management of the several colonial governments, and the colonial 
 legislatures are empowered to establish their own customs regulations 
 and rates of duty ;' 
 
 and by an act of 1857 the powers of the self-governing coIo 
 nies were further extended. The last episode in the struggle 
 took place in 1859, when, on the motion of the manufacturers 
 of Sheffield, the Duke of xXewcastle protested against a new 
 Canadian tariff. The rights of the colonies were finally vin- 
 dicated by the memorandum of Sir Alexander (then Mr.) 
 Gait, the Canadian minister of finance ; and the broad prin- 
 ciple he then enunciated has never since been questioned : 
 
 Self-government would be utterly annihilated if the views of the 
 Imperial Government were to be preferred to those of the people of 
 
 >Todd, op. cii., pa|2;e 178.
 
 56 COMMERCIAL POLICY. 
 
 Canada. It is, therefore, the duty of the present government [of 
 Canada] distinctly to affirm the right of the Canadian legislature to 
 adjust the taxation of the people in the way they deem best, even 
 if it should unfortunately happen to meet the disapproval of the 
 Imperial ministry. Her Majesty cannot be advised to disallow such 
 acts, unless her advisers are prepared to assume the administration 
 of the affairs of the colony, irrespective of the views of its inhabitants. 
 The Imperial Government are not responsible for the debts and en- 
 gagements of Canada, they do not maintain its judicial, educational 
 or civil service, they contribute nothing to the internal government of 
 the country, and the Provincial Legislature, acting through a ministry 
 directly responsible to it, has to make provision for all these wants. 
 They must necessarily claim and exercise the widest latitude as to 
 the nature and extent of the burdens to be placed on the industry 
 of the people. ^ 
 
 This principle was finally sanctioned by the Imperial Padia- 
 ment, in the British North America Act, 1867, §91, which 
 recognizes the exclusive legislative authority of the Parlia- 
 ment of Canada over all matters relating to " the regulation 
 of trade and commerce," " the raising of money by any mode 
 or system of taxation," and " navigation and shipping." Ac- 
 cordingly, when, in 1879, on the adoption of a highly pro- 
 tectionist national policy, the secretary for the colonies was 
 invited in the House of Commons- to disallow the act, he 
 declined to interfere, because the matter was entirely within 
 the competence of the Dominion Parliament. 
 
 Down to the year of the appointment of the Marquis of 
 Lome (1878), instructions were issued to the successive gover- 
 nors-general to reserv-e for the consideration of the Imperial 
 government any bills imposing differential duties ; and the 
 omission of the specific instruction in his case may be re- 
 garded as the close of this contention. One part of the con- 
 tention had many years before been definitely settled in 
 favor of the colonies — namely, the right to discriminate in 
 
 'Canada Sessional Papers, i860, No. 38. 
 ■i March ao, 1879, Todd, op. cit., page 183.
 
 COMMERCIAL POLICY. 57 
 
 favor of other colonies, subject always to the treaty obliga- 
 tions of the Imperial government ; but the right, for which 
 the colonies contended, to discriminate in favor of foreign 
 nations has not yet been admitted — in form, at least. The 
 contention arose from the position of distress in which the 
 colonies found themselves, after the repeal of the colonial 
 preferences in the English market. Lord Grey's dispatches 
 (March 22 and November 8, 1848), instructing colonial gover- 
 nors, evidently have reference to differentials granted to the 
 mother country and are inspired by all the fanaticism of 
 absolute free-trade doctrine. The reply to the address which 
 the Assembly of New Brunswick made to the Queen, on the 
 subject of the repeal of the Navigation Laws, contains the 
 suggestion that the North American colonies were at liberty 
 to place intercolonial commerce on the footing of the coast- 
 ing trade (to which foreigners were not admitted) ; and the 
 Assembly responded by a request to be allowed to do so, 
 preparatory to a demand on the United States for reciprocity. 
 But, in spite of this admission of the principle and in spite of 
 their own suggestion, the Imperial government continued to 
 interpose objections and difficulries regarding intercolonial 
 reciprocity. The objections were based on an incorrect read- 
 ing of the terms of certain treaties ; and the home govern- 
 ment claimed that the mother country alone, of all the nations 
 of the earth, would be excluded from the operation of the 
 reciprocity treaties. Despite these objections, however, par- 
 tial facilities were from time to time granted : and before the 
 formation of the Confederation in 1867 the British North 
 America colonies were more or less granting reciprocal con- 
 cessions to each other. The quesrion was settled, so far as 
 Canada was concerned, when the American colonies entered 
 the Confederation ; but in 1868, before Prince Edward Island 
 had entered the Dominion, the problem again came up for 
 discussion. The newly formed Dominion admitted certain
 
 68 COMMERCIAL POLICY. 
 
 articles duty free from Prince Edward Island, and in return 
 Canadian breadstuff s were admitted free into the island. 
 The secretary for the colonies protested that this was con- 
 trary to the treaty obligations of the mother country; but 
 Sir John Rose pointed to the precedent of an act of the old 
 province of Canada, passed in 1850, permitting free entry 
 of the products of other North American colonies — an act 
 which was not disallowed. Again in i860, as he reminded 
 the colonial secretary, when it was proposed to extend exist- 
 ing arrangements so as to admit all articles of colonial growth 
 and manufacture free of duty on reciprocal terms, although 
 the Lords of the*Committee of the Privy Council on Trade 
 recommended that assent to this law be conditional on the 
 granting of a like concession to all other countries, the Duke 
 of Newcastle (February 5, 1861) was forced to admit that 
 " they had no wish to offer any obstacle to any endeavours 
 which might be made to bring about a free commercial 
 intercourse between the North American colonies." 
 
 To the legislation of 1868, the Board of Trade (to which 
 colonial commercial legislation is referred by the colonial 
 secretary) objected that the differential duties must be ex- 
 tended to all countries having " a most favored nation clause " 
 in a treaty which extended to British possessions as well as 
 to the United Kingdom. The ultimate result, they said, 
 might be 
 
 that British produce, i.e., the produce of the United Kingdom and 
 of British possessions not situated in North America, will be the 
 only produce which is shut out by differential duties from consump- 
 tion in Canada. 
 
 The colonial secretary was, however, fain to content himself 
 with the hope that, 
 
 if ever the products referred to in the sixth section of this act are
 
 COMMERCIAL POLICY. 59 
 
 admitted free of duty from the United States, a similar immunity 
 will be extended to the same products of the United Kingdom and 
 of all foreign countries.,', 
 
 Thus the Board of Trade was discomfited, and the question 
 of intercolonial reciprocity was settled — at the time for 
 Canada, but constructively for all self-governing colonies. 
 
 The other colonies were not long in claiming a similar 
 privilege, though they have not yet agreed to act upon the 
 permission) which was a few years later (1873) granted to 
 them. In 1870 the Intercolonial Free Trade Act passed by 
 the legislature of Tasmania was disallowed ;" and in the 
 following year the Australasian colonies — New South Wales, 
 Tasmania, South Australia, Victoria and New Zealand — 
 made formal application to be allowed to establish a com- 
 mercial union. They joined to this application a request that 
 no treaty should be concluded by the Imperial government 
 with any foreign power which should conflict with the exer- 
 cise of intercolonial reciprocity, and that Imperial interference 
 with intercolonial fiscal legislation should cease. The colo- 
 nial secretary apparently dodged the main issue, and insisted 
 that " the constitutional right of the Queen to conclude 
 treaties binding all parts of the Empire cannot be ques- 
 tioned " ; although he seemed to admit the power of the 
 colonial parliaments toi make the treaties a dead letter, so far 
 as they were concerned, by refusing to pass the laws " which 
 may be required to bring such treaties into operation." The 
 Australasians were not satisfied with this answer ; and a colo- 
 nial conference, at which Queensland and Western Australia 
 were also represented, was held at Sydney in February, 1873, 
 to urge the necessity of the removal of all Imperial restric- 
 tions on intercolonial free trade. The colonies had their 
 
 1 Canada Sessional Papers, No. 47, i86g. 
 
 2Todd, of), cii., p. 127. The Australian colonies were precluded, by the Con- 
 stitution Acts granted to them, from entering into differential tariff agreements with 
 each other or with any other country.
 
 60 COMMERCIAL POLICY. 
 
 way, as the colonies generally have ; and the Australian Colo- 
 nies Duties x^ct (1873) ^^'^^ passed, which granted 
 
 full power to each of the colonies concerned to make laws, imposing 
 or remitting duties whether differential or preferential or otherwise, 
 for or against one another. It also extends the powers of the colo- 
 nial legislatures in Australia to regulate the duties on the importation 
 of articles not the growth, produce or manufacture of Australia or 
 New Zealand. But it retains the prohibition against differential 
 duties on goods imported into the colonies from foreign countries or 
 from Great Britain.^ 
 
 The latter prohibition, against discriminating in favor of the 
 mother country, continued in force till the denunciation of 
 the German and Belgian treaties in 1897. 
 
 The colonies are not yet free to impose differential duties 
 so as to confer exceptional advantages upon foreign over 
 British trade, and they may not use their liberty to the 
 direct injury of British commerce. That much, at least, is 
 involved in the idea of empire ; and the mother country- claims 
 — and is likely to have her claim always allowed — to be en- 
 titled to the most favored nation clause. This right has 
 never been seriously questioned, though in 1854 it was by 
 mutual consent ignored. The repeal of the colonial pre- 
 ferences in the English market and of the Navigation Laws"^ 
 had wrought so much distress in the colonies that it was im- 
 perative, to use the words of the address adopted bv the 
 
 iTodd. op. cit.. pp. 195-197. Down to the year (1880) of the publication of this 
 work, at least, the governors of the Cape of Good Hope and of South Australia were 
 instructed to withhold assent from all bills imposing- differential duties (other than as 
 allowed by the Australian Colonies Duties Act of 1873) ; and in form, at least, they 
 were unable to grant differentials to non-.\ustrallan colonies, till 1895 (s^ Vict. c. 3), 
 when the restriction was removed. — Todd. op. cit., page 132. 
 
 -The repeal of the Navigation Laws was a grievance in the seaboard colonies 
 only. The old province of Canada gained little from the restriction and was debarred 
 by it from taking advantage of her "opportunity for securing for her vast system of 
 inland navigation the great and growing carrying trade of North-western America" ; 
 and in 1848 numerous petitions for the repeal of the Navigation Laws, so far as they 
 applied to Canada, were sent to London. — Todd, op. cit,, page 179.
 
 COMMERCIAL POLICY. 61 
 
 New Brunswick Assembly in 1850, that they should "obtain 
 the open ports and the unrestricted coasting trade of the 
 American Union ";^ and accordingly in 1854 Elgin's Treaty 
 was negotiated. The difficulty about discriminating against 
 the mother country was not raised, partly owing to the neces- 
 sities of the colonies and partly also to the fact that it was a 
 discrimination in name only, for the reciprocity was confined 
 to certain natural products which the mother countr}- did not 
 export.^ This concession would have formed an admirable 
 precedent for a more extended treaty, had such a precedent 
 ever been sought ; but Canadian official negotiations with 
 Washington have always been based on the terms of the treaty 
 of 1854 — reciprocity of natural products. When the Liberal 
 party in Canada adopted the program of unrestricted reci- 
 procity, there were not wanting those who denounced this last 
 right of the mother country to rank as a most favored nation. 
 That unrestricted reciprocity would practically, as well as 
 nominally, have discriminated against the mother countr}', 
 cannot well be denied ; and those who advocated it had to 
 fall back on the argument that it was a matter of indifference 
 to England whether her goods were excluded by a tariff 
 framed at Washington or at Ottawa, and that England would 
 gain an increase of trade from the greater prosperity of the 
 Dominion of Canada, resulting from reciprocal trade rela- 
 tions with the United States.^ The movement for unre- 
 
 1 Journals of New Brunswick House of Assembly, April 25. 1850. 
 
 2" In 1854 the treaty known as the Reciprocity Treaty was finally concluded, 
 admitting- certain natural products of each country free into the other, without any 
 qualification as to the differential or discriminating character of its provisions." — 
 Confidential report to Governor-General for transmission, made by Sir John Rose, 
 September 3, 1868, Canada Sessional Papers, No. 47, 1869. 
 
 3 See the speeches of Sir Richard Cartwright and others in Canadian Hansard, 
 1890, I, 144-646. Informal negotiations between Canada and the United States were 
 broken oflF in 1892, because the Canadian delegates were not willing to discriminate 
 against the mother country ; and on the protest of Canada, when the Newfoundland 
 government proposed to pass legislation to carry out the convention ot 1890 with the
 
 62 COMMERCIAL POLICY. 
 
 stricted reciprocity now has few adherents in Canada; and 
 the right of the mother countiy to at least the treatment of 
 the most favored nation is supported by the practically un- 
 animous conviction of the Canadian people and, while the 
 present Imperial temper lasts, is not likely to be called in 
 question. 
 
 The several commercial concessions made to the colonies 
 during the last half century were invariably qualified by a 
 clause respecting the treaty obligations of the Empire. A 
 colony, however free and independent, is bound by all Im- 
 perial treaties, unless specially exempt from their scope ; and 
 before the days of colonial freedom the Imperial Parliament 
 had entered into treaties which bound the colonies not to 
 discriminate in favor of the products of the mother country. 
 The last phase of the colonial struggle for commercial free- 
 dom has been the effort to secure the following concessions : 
 (i) That the colonies should not be included in commercial 
 treaties without their own consent; (2) that in the framing 
 of treaties directly affecting their interests they should be 
 directly represented ; and (3) that all past treaties which re- 
 stricted the action of the colonies in working towards an 
 Imperial customs union should be denounced. 
 
 The first two rights were readily yielded. They were so 
 obviously the logical outcome of the control of their own 
 fiscal affairs that they had but to be demanded to be con- 
 ceded. When the Canadian government informed the colo- 
 nial office that thereafter (March 26, 1881) it desired to be 
 informed 
 
 of the inception of any new treaty, and that in future no stipulation 
 binding upon the commerce of Canada should be introduced into 
 
 United States, tlie colonial secretary (March 26, 1892) assured the Dominion govern- 
 ment that legislation discriminating against Canada would be disallowed. — Lord 
 Ripon's Despatch to Governor-General of Canada, June 28, 1895 ; Canadian Statistical 
 Year Book, 1894, page 309.
 
 COMMERCIAL POLICY. 63 
 
 any treaty without reserving to the Canadian government the option 
 of acceptance or refusal/ 
 
 it was perfectly natural that Lord Carnarvon should agree 
 that a new clause should be inserted in all treaties there- 
 after concluded, to the effect that no colony was included 
 except at its own option. As regards the second demand, 
 while, of course, no colony could enter into direct negotia- 
 tions with an outside power, the difficulty was got over by 
 naming colonial statesmen as Imperial representatives for the 
 negotiation of treaties peculiarly affecting colonial interests. 
 
 Thus far there was no difficulty ; but when it came to the 
 denunciation of treaties then in force, the interests of the 
 mother country were directly involved. To denounce the 
 treaties, it was feared, might derange English trade with 
 important customers — and that without immediate prospect of 
 any compensating advantage. The colonies did not show 
 any great desire to favor English goods and had all, with one 
 exception, discriminated against her manufacturers in favor 
 of their o\Tn. Therefore, until a quid pro quo was offered in 
 the shape of an actual discrimination in her favor, public 
 sentiment in England did not call for the denunciation of the 
 treaties. The colonists proceeded in the wrong way to achieve 
 their end. An Imperial customs union meant for them a 
 discrimination in the English market for colonial goods, for 
 which they were willing to pay the price of granting English 
 goods a differential. They protested against the treaties, be- 
 cause these stood in the way of their ultimately obtaining 
 privileges for which they could concede none; and English 
 sentiment naturally remained unaffected. 
 
 The treaties which stood in the \v-ay were the treaty with 
 Belgium of 1862 and that with the German Zollver'ein of 
 1865. These stood upon a special footing. 
 
 ^Canadian Senate Hansard, 1891, pp. 613 et seq.
 
 64 COMMERCIAL POLICY. 
 
 The ordinary most favored nation clause in various treaties between 
 Great Britain and foreign powers would not preclude the conclusion 
 of special preferential arrangements between the colonies, or between 
 a colony and Great Britain. As against foreign powers, in the 
 absence of specific provision, the Empire is a whole or a unit, 
 within which any fiscal arrangements may be made without infringing 
 the concession involved in that clause. ^ 
 
 While these treaties did not prevent differential treatment by 
 the United Kingdom in favor of the British colonies, or 
 differential treatment by British colonies in favor of each 
 other, they did prevent differential treatment by British colo- 
 nies in favor of the United Kingdom, without extending the 
 same concessions to foreign contracting powers. Thus, by 
 the operation of the most favored nation clause in other 
 treaties, they admitted all the nations with which the United 
 Kingdom had commercial treaties. Their existence was, then, 
 an obstacle to an Imperial customs union. These treaties 
 were passed during the period when colonial interests were 
 being treated with unsalutary neglect j^ and Lord Salisbury 
 admitted some years ago that no reason had been given — or 
 could be found — for the permission given to a foreign power 
 to interfere in what should have been the purely private 
 affairs of the empire. But, however the clauses had come to 
 be inserted, there they were; and they effectually barred 
 the way to preferential treatment of the mother country by 
 the colonies. They not only did this, but they also compelled 
 the colonies to molify their fiscal legislation.-^ But the de- 
 
 iLord Jersey's Report to the Colonial Secretary on the Colonial Conference at 
 Ottawa, 1894. This report and Lord Ripon's despatches are printed in the Canadian 
 Statistical Year Book, 1894, pp. 270-310. 
 
 _ 2 Burke claimed that the colonies had prospered because :hey had been treated 
 with "salutarj- negrlect." 
 
 3 ■• We have already had to modify our legislation, in a way which we ourselves 
 did not desire, in consequence of these treaties." (Sir John Abbot, in Canadian 
 Senate, September 25. .891. Senate Hansard, 1895, page 6.3). The German govern- 
 ment had protested against the inclusion in the invoice price at Canadian ports of 
 freight charges on German goods to the United Kingdom which were reexported 
 from England to Canada.
 
 COMMERCIAL POLICY. 65 
 
 nunciation could come from the Imperial government only ; 
 and, while the commerce of the United Kingdom with Bel- 
 gium and Germany would be exposed to risks, and " would 
 have to be carried on under fiscal conditions subject to con- 
 stant changes and fluctuations, or, at all events, without that 
 permanence and security which is of primary importance to 
 successful and profitable interchange," on the other hand, no 
 scheme had been proposed which foreshadowed " any precise 
 advantages to be secured to the export trade . . . from 
 the United Kingdom to the colonies in the event of the ter- 
 mination of these treaties. "^ 
 
 The Canadian preferential tariff of 1897 changed all the 
 conditions. A " precise advantage '" was offered, and the loyal 
 sentiment of the year necessitated England's acceptance of 
 the offer. Whether the Canadian government was correct in 
 its contention that the concessions granted were not gratuitous 
 but were a return for concessions already made by the mother 
 countr}', and therefore did not come under the interpretation 
 of the most favored nation clause, need not now he dis- 
 cussed. It is obvious, as Sir John Abbot foresaw in 1891. that 
 such an interpretation would have led to litigation ; and the 
 British governmient wisely cut the knot by denouncing the 
 treaties. 
 
 The last restriction on the colonies was thus ren-:0\-e(l. 
 Their right to be considered in the making of treaties had 
 already been granted. The right to say whether they would 
 be bound by treaties contracted before they had obtained the 
 former right, was conceded by the denunciation. Lord 
 Jersey, in his report of the colonial conference, had sug- 
 gested that an additional article should' be included in all 
 British commercial treaties, enabling " any colony to with- 
 draw from the treaty at the date when it is terminable '" ; 
 
 "Lord Ripons Despatch, June 2S, iS.»s.— Canadian Statistical Year Book, 
 1894, pag^e 305.
 
 66 COMMERCIAL POLICY. 
 
 but the action of the Imperial government, by practically ad- 
 mitting the right of colonial initiative in Imperial affairs, had 
 advanced matters further than Lord Jersey had ventured to 
 suggest. 
 
 The restrictive commercial system has narrowed down to 
 the following minor points : The mother country claims to be 
 included as a most favored nation in all treaties contracted on 
 behalf of the colonies ; the colonies cannot disregard the Im- 
 perial obligations, by discriminating in favor of one nation 
 and against another, when the mother country has with the 
 excluded foreign state commercial treaties containing the most 
 favored nation clause; no colony can endeavour, in direct or 
 indirect negotiation, to obtain an advantage at the expense of 
 any other part of the Empire ; and finally, in 
 
 the case of preference being' sought by or offered to the colony in 
 respect of any article in which it competed seriously with other colo- 
 nies, or with the mother country, Her Majesty's Government would 
 feel it to be their duty to use every effort to obtain the extension of 
 the concession to the rest of the Empire."' 
 
 These seem to constitute the minimum of empire. They 
 might be conceded, if demanded ; but the concession would 
 be equivalent to breaking up the Empire into a number of 
 independent states — a result which none of the colonies in 
 any measure desires. 
 
 1 Lord Ripou's Despatch, Canadian Year Book, page 310.
 
 ( '37 ) 
 
 CHAPTER III. 
 COMMERCIAL FEDERATION. 
 
 WHEN Prince Bismarck declared in 1884 that it was not 
 the intention of the German Government to found 
 provinces but commercial undertakings'^ he set forth not only 
 the intention of the German Government but the motive of 
 all colonisation and the ideal of colonial policy of all nations. 
 This is the one permanent colonial problem — how to raise 
 up a nation of customers. Other problems have attracted 
 attention and have been solved or disappeared naturally in 
 the development of history. Indeed, nothing is so remark- 
 able in the history of colonial policy as this fact of the com- 
 plete disappearance of so many of those problems on which 
 the fate of our colonial empire seemed to depend, and about 
 which whole generations of men ha\e vexed and agitated 
 themselves. Men used to grow heated over the pro and cons 
 of responsible government, of penal settlements, and 
 systematic colonisation and state aided emigration, of land 
 grants and the treatment of natives. Yet these questions are 
 all dead issues. Some of them have solved themselves and 
 other have been solved by contriving to shift the respon- 
 sibility from the Imperial Government to the colonial adminis- 
 trations. These questions, if they remain questions at all, are 
 no longer problems of colonial policy but problems in the 
 domestic politics of the colonies. The land question, which 
 so interested Wakefield and his fellows, was transferred tc^ 
 the colonial legislatures, and has there, the theorists to the 
 contrary, been settled satisfactorily, to the colonists at least, 
 
 iDawson: Bismarck and State Socialism, page iji.
 
 1 
 
 68 COMMERCIAL FEDERATION. 
 
 in the way best fitted to promote the growth of the colonies ; 
 and the treatment of the natives by colonial governments has 
 been, at the worst, as satisfactory as it was while the Imperial 
 Government was worried by the Nonconformist conscience. 
 Canada, for instance, has no cause ta be ashamed of her 
 treatment of the Indians if comparison must be made with 
 the policy of the Imperial Government on this question. 
 Whether, settled or not, these are no longer questions of 
 colonial policy. 
 
 But there is one question of colonial policy whose interest 
 is perennial. It has never been satisfactorily solved ; and it 
 cannot be devolved upon the colonial legislatures, because it 
 cannot be treated as a problem of domestic interest of any 
 one colony or group of colonies. This is the question of the 
 commercial relations of the colonies to the mother country 
 and of the mother country to the colonies. Each generation 
 has had its own solution, but the problem isi still unsolved 
 and still pressing for solution, and still apparently as far from 
 solution as ever. Various policies have been adopted, varying 
 from absolute monopoly to the absolute freedom of in- 
 difference on the one side, and from high protection against 
 the products of the mother country and even quasi discrimina- 
 tion against her to preferential treatment on the other. These 
 policies can hardly be said to have been suited to the genera- 
 tions which adopted them ; and they have never satisfied the 
 generations which followed. This problem has been for four 
 hundred years before the minds of those statesmen who have 
 concerned themselves with over-seas expansion. In the 
 charter which Henry VII. granted to the Cabots traces of 
 it appear. It was the object of the old colonial policy which 
 ended in the disruption of the empire. Commercial con- 
 siderations determined the attitude of the Little Englanders 
 and commercial considerations animate the Federationists of 
 to-day. Mr. Chamberlain, like Henry VII., dreams of un-
 
 COMMERCIAL FEDERATION. 69 
 
 developed resources and hopes to exploit them on behalf of 
 the mother country-. The commercial relations of the various 
 parts of the Empire has been the dominant idea in times of 
 expansion, of disruption, and of consolidation ; and the 
 problem still demands solution. It cannot be set aside ; and 
 to-day, notwithstanding the growth of imperial sentiment and 
 the realisation by the colonies of their imperial heritage, it 
 may still be said that the future of the Empire depends on 
 the solution of this question. 
 
 The present practical importance of the problem is due to 
 the renewed interest which the predominant partner is taking 
 in it. The cosmopolitan indifference which the mother 
 country has for nearly half a century shown towards the com- 
 merce of her colonies has given way ; and in a few short 
 years there has not only been a revival of interest in the 
 commercial aspects of colonial policy, but also a remarkable 
 ripening of opinion regarding the possibility of finding a 
 solution of the difficulties. The change has not been in the 
 attitude of the colonists. There are still living those who 
 remember the palmy days when Canadian lumber had a pre- 
 ference in the English market ; and there has been a con- 
 tinuity of opinion in favour of a return to that side of the 
 colonial policy which benefited the colonies. For a time the 
 effects of the Reciprocity Treaty of 1854 were such as to 
 remove the most powerful causes of discontent at the change ; 
 but the repeated failures to get that Treaty renewed in some 
 shape or form, and the economic effects of the National 
 Policy, which, by restricting purchases also restricted the sales 
 of Canadian produce, again turned colonial attention to the 
 market which a fiscal preference had once made their own. 
 Without realising how profound a change had been effected 
 in English policy by the simplification of the tariff, the colo- 
 nists naively demanded that the new policy should be set 
 aside or so modified as to suit colonial interests. They had
 
 70 COMMERCIAL FEDERATION. 
 
 no conception how irritating such a demand was to those 
 who thought that England's prosperity dated from 1845, and 
 there certainly was no intention of adopting a " stand and 
 deliver " attitude towards the English consumer. It has been 
 said that England lost half of her colonial empire because 
 she persisted in taxing her colonists, and was like to lose the 
 other half because she would not allow her colonists to tax 
 her. This could be said from the English point of view only. 
 The colonists not only had no conception of demanding con- 
 cessions in return for their loyalty to the Imperial connection ; 
 but it never crossed their minds that such an interpretation 
 could be placed upon their demands. The irritation was 
 perhaps natural enough upon the part of the mother country 
 which had made visible sacrifices for her colonies and could 
 see no visible advantages which protectionist colonies con- 
 ferred upon her; but it cannot be too often repeated that the 
 colonists intended neither to irritate nor to threaten. 
 
 To the colonist the demand seemed to involve nothing 
 more than a modification of the tariff such as he was annually 
 accustomed to. In the colonies there was practically no free 
 trade principle. A party in opposition might adopt free trade 
 as a party cry ; but the individual members of the rank and 
 file of the party had no understanding of what the policy in- 
 volved and no hesitation in modifying their platform when they 
 came into oflfice so as to preserve a continuity of protectionist 
 policy. Those who expected that the Liberal party in Canada 
 after 1896 would redeem their pre-election promises were 
 quickly shown how baseless their expectations were. The hope 
 did more credit to their belief in the consistency of politicians 
 than to their own insight into the political and financial con- 
 ditions of the country. For while it rem.alned necessary to 
 raise the greater portion of the revenue by customs taxation 
 no colony could possibly be other than protective in its fiscal 
 policy.
 
 COMMERCIAL FEDERATION. 
 
 So to the colonists, to free trader as well as to protec- 
 tionist, the question was one simply of tariff manipulation 
 and the persistent refusal of the mother countr\- to make such 
 a trifling modification of her tariff as the imposition of a 
 five per cent, duty on non-imperial products would have in- 
 volved, was but another evidence of the survival of the little 
 England spirit. 
 
 As a matter of fact the refusal was simplv the assertion of 
 the predominant partner that she was entitled to the same 
 freedom to manage her own tariff policy as the colonies had 
 quarter of a century before asserted for themselves. Britain 
 was as much entitled to adopt free trade as the colonies had 
 been to adopt a protection tariff. To the mother country a 
 five per cent, preference to colonial products was a difference 
 of kind, not of degree, as it would have been in the colonies ; 
 and she was of the sentiment of Mrs. Easy when the nurse 
 excused her illegitimate child on the ground that it was only 
 a little one. No English statesman could regard the question 
 as the simple matter it appeared to every colonist. It in- 
 volved an abandonment of principle or rather the modifica- 
 tion of a policy which success had crystallised into a prin- 
 ciple. The colonial demand seemed to those responsible for 
 British policy to be of the same character as the demand 
 which a heavy drinker might make of a total abstainer, in 
 the interest of harmony of life and principle, to split the 
 difference and come to a compromise at two glasses a day. 
 It was in the circumstances not unnatural for English Free 
 Traders to imagine that the colonists were attempting to drive 
 a bargain for their loyalty, and somewhat curtly to remind the 
 colonist that the English quid pro quo had long since been 
 paid over. 
 
 For a generation the question remained in this region of 
 misunderstanding. But of late years there has come more 
 understanding on the side of the mother country at least.
 
 72 COMMERCIAL FEDERATION. 
 
 The colonies have partially shown that they understand the 
 position of the mother country and the course of events in 
 the industrial world have led many at home to remember that 
 Free Trade is after all a policy only. How far this better un- 
 derstanding has been helped in the mother country by the 
 re-appearance of those economic conditions which produced 
 the mercantile system we need not consider at length. There 
 can be little doubt that the United Kingdom became a Free 
 Trade country because the old ideas of relative advantage 
 had lost all their importance. The absolute advantage for 
 which she willingly sacrificed the niggling devices of the mer- 
 cantile system remained hers for nearly three-quarters of a 
 century. But naturally she could not always retain her posi- 
 tion of absolute and unquestioned industrial supremacy. She 
 had a long start but the United States and Germany during 
 the last quarter of a century have been making rapid strides 
 and capturing certain branches of English trade. "},Iade in 
 Germany" has even become the subject of a searching of 
 heart and alarmists have spoken of the decline and fall of 
 England's industrial supremacy. In the nature of things this 
 renewal of competition was to be expected ; and it need not 
 be the cause of alarm. It is only once in a lifetime that one 
 can be twice the age of one's younger brothers, and though 
 the relative advantage may grow less, may indeed at certain 
 points disappear altogether, the absolute advantage may re- 
 main. But the re-appearance of competition has bent, not 
 policy but, some opinion back from considerations of plenty 
 to considerations of power; and mercantile ideas are beginn-, 
 ing again to find expression. War and commerce are again 
 spoken of in the same breath. We hear more of the re- 
 sources of the Empire, of trade and the flag and the commer- 
 cial advantage of expansion ; and in Mr. Chamberlain we 
 have just such another statesman as Adam Smith so vehem- 
 ently denounced more than a century ago.
 
 COMMERCIAL FEDERATION 
 
 This change of conditions may not have made the fallacies 
 of Fair Trade less fallacious but it certainly makes them 
 more popular; and there may be a growing minority ready 
 to coquet with protection. The strength of this minority is 
 certainly overestimated in the colonies, perhaps also at home. 
 A momentary irritation at the capture of the English market 
 by certain goods made in Germany or at the invasion by the 
 United States of markets which the English manufacturer has 
 come to regard as his preserve, may lead some men to blas- 
 pheme against Free Trade ; but is not likely to lead them de- 
 liberately to vote against it. They complain of its drawbacks 
 as they complain of the weather. And it certainly remains 
 true that the party which proposes to lay a tax on the peo- 
 ples bread whether to aid the colonies or to benefit the land- 
 owner has an uphill fight to make with little prospect of vic- 
 tory at the end. The situation would invite the "picture poli- 
 tics" of the great and the little loaf and a cartoon has ere now 
 decided the direction of English financial policy. 
 
 The change of sentiment, however far it might lead the 
 English electorate, is fortunate in one way at least. It has 
 rendered possible an unprejudiced discussion of the whole 
 question of commercial federation ; and has convinced the 
 colonies that England's adherence to Free Trade is not a 
 matter of abstract or book principle, but a matter of financial 
 and industrial expediency, which, when you come to think of 
 it, is the only intelligible principle in tariff legislation. The 
 colonies could understand why England's conception of her 
 commercial and industrial interests might stand in the way of 
 federation ; but the appeal to a book principle which they 
 neither understand nor appreciate served only to irritate. 
 There have been many misconceptions of what free trade is, 
 but the strangest of all is, that a pis allcr policy like Free 
 Trade should be regarded as a sacred principle for which 
 men and nations should be prepared to testify. What Eng-
 
 74 COMMERCIAL FEDERATION. 
 
 lish statesmen object to is dicussing annually a question 
 which had better be settled wrongly than annually unsettled. 
 They think that the burden of the proof lies on those who 
 would disturb the status quo and they are not ready to take 
 every random expression of discontent as a proof that a 
 policy, justified by half a centur>-'s expression, should be re- 
 versed. In commercial federation we may or may not have 
 a reason for disturbing the status quo and many Free Traders 
 have expressed their opinion that an intensive is preferable to 
 an extensive cultivation of Free Trade. The important point, 
 however, is that commercial federation seems, to a large and 
 a growing section of the English electorate, to be a end great 
 enough and worthy enough to lead to a partial reconsidera- 
 tion of a pis allcr policy. 
 
 A more important influence producing this change of Eng- 
 lish sentiment was the Canadian preferential tariff of 1897. 
 The revi\'al of mercantile ideas is after all not of much posi- 
 tive importance for the development of a sound colonial 
 policy. For it is only by confusion of thought that the vic- 
 tims of mercantilism imagine they are in favour of colonial 
 development. Mercantilism wrought its perfect work on the 
 colonies in the i8th century and would go as far again in the 
 same direction as it dared. But the Canadian preferential 
 tariff appealed to a more influential section of the nation. It 
 influenced those who were adherents of a policy which had 
 led to the development of the colonies in the past but now 
 was in danger of becoming an obstacle to their further de- 
 velopment. The majority of the people of the United King- 
 dom were in favour of granting the colonies the most abso- 
 lute freedom to manage their own affairs, but the same ma- 
 jority suspected that the colonies had designs on the freedom 
 of the mother country. The value of the Canadian preferen- 
 tial tariff consisted not in the amount of the preference given, 
 for, as the event has shown, the volume of British exports to
 
 COMMERCIAL FEDERATION. 
 
 Canada has not materially increased ; but in the conviction 
 which the manner of giving inspired in the minds of the peo- 
 ple in the mother country. The English public had acquies- 
 ced in colonial protective tariffs which treated English goods 
 as badly as the goods produced by foreign nations while at 
 the worst England's Free Trade tariff only treated foreigners 
 as well as it treated the colonists ; but it took all Sir 
 Charles Tupper's eloquence, during many years of his resi- 
 dence in England, to remove the false impression that Canada 
 in fact, if not in name, discriminated against English goods 
 in favour of the products of the United States ; and to all his 
 charming in the direction of a differential duty on foreign 
 grain they turned an absolutely deaf ear. This to their minds 
 was simply another colonial raid on the imperial pocket. They 
 were not prepared to make a profound change in their trade 
 policy to secure the possibility of some trifling change being 
 made in colonial tariffs. In spite of suggestions and appeals, 
 they were not by any means so ready as many colonists 
 thought they should have been, considering their imperial 
 responsibilities, to enter into negotiations for a settlement of 
 this problem of commercial relations. As a matter of fact 
 they were tolerably well content with things as they were, and 
 saw no reason why they should court change to suit those who 
 were discontented. 
 
 The Canadian preferential tariff had the effect of changing 
 all this. It abandoned the colonial attitude of waiting for 
 England to make the first move. It was not a proposal for 
 negotiations but a definite concession with which there was 
 coupled no sinister demand for a quid pro quo. To many 
 Canadians it seemed then, and seems still, to have been a 
 grand mistake not to make the concession the basis of nego- 
 tiations, and there have not been wanting those who declare 
 that Sir Wilfred Laurier was false to the interests of Canada 
 when he failed to demand a reciprocal concession and still
 
 76 COMMERCIAL FEDERATION. 
 
 more when he later repudiated the idea of making such a i.Ie- 
 mand. This feeling is not confined to his poUtical and out- 
 witted opponents. Many of his supporters who are in party 
 bound to defend his poUcy in pubUc, do not hesitate to ex- 
 press in private their regret that their leader failed to take ad- 
 vantage of his undoubted opportunicies. It seemed so na- 
 tural to strike while the iron of British prejudice was at the 
 white heat of the Jubilee year, and reap the full advantage of 
 the sentiment which the Canadian offer evoked. He had 
 placed himself on record as being in favour of preferential 
 treatment in the English market and it seemed the very refine- 
 ment of punctiliousness not to ask and receive at such a time 
 what he, and every Canadian, wanted, and not an English- 
 man of them all would at that time have refused to grant. 
 Lewd politicians of the baser sort have suggested that it was 
 the prospect of the Cobden Club medal that made him thus 
 betray the interests of Canada ! 
 
 Yet it should not be difificult to see, except for the most pre- 
 judiced of his opponents, that he did not betray the interests 
 of Canada unless it can be shown that the interests of the 
 Empire and the interests of Canada are opposed to each 
 other. He may in that case have been false to the interests 
 of Canada but he was true to the interests of the Empire. A 
 reciprocal concession might have been made in the haste of 
 sentiment to be repented of in the leisure of experience. Sir 
 Wilfred Laurier showed good taste as well as good states- 
 manship in refusing to take advantage of a Jubilee enthu- 
 siasm. He very wisely consented to wait England's own time. 
 To have rushed matters then would have been detrimental to 
 the interests of the Empire. It would have created within a 
 few months a party in English politics hostile to the colonies, 
 which is the very last thing an imperially minded statesman 
 would desire to create. Practically by his attitude he said : 
 Here is our concession. We leave it to your good sense and
 
 COMMERCIAL FEDERATION. 77 
 
 discretion what return you sliall make for it. We give freely 
 and we ask nothing. We have received freel\- from you in 
 the past. This is the beginning of the return which the eldest 
 daughter of the En^pire makes. You know our desires and 
 our aspirations but take your own time and manner. 
 
 Nothing from an imperial point of view could have been 
 more fortunate than such a course. It disarmed suspicion. 
 It converted the English by platoons and battalions to the 
 idea of Commercial Federation. It gave Canada a position 
 in the councils of the Empire which nothing else could have 
 done. It may have delayed the satisfaction of Canadian de- 
 sires but it made the achievement of the purpose more secure 
 in the end. 
 
 There was also one direct and tangible result of the con- 
 cession. The German and Belgian treaties, against which 
 the colonies for nearly half a century had raged in vain, were 
 denounced and the way towards commercial federation of the 
 empire was opened up. The arguments which had seemed 
 so conclusive and so valid reasons for inaction, as recently as 
 1894, when the Colonial Conference at Ottawa desired the 
 denunciation of these treaties were swept; aside. But the 
 principal result must be sought in the change of English senti- 
 ment of which the denunciation of the treaties was a sign. As 
 yet England has done nothing to match the Canadian conces- 
 sion; and there has even been a disposition to act as if noth- 
 ing more need be done. Some writers seem to see the re- 
 quired quid pro quo in the increased English purchases of 
 Canadian produce. But that is not a sufficient, or any kind 
 of return. From such a point of view the preferential tariff 
 has the reward of a skilfully planned advertisement. But it 
 was not intended as an advertisement and indeed the in- 
 creased purchases of Canadian produce are due to the long 
 continued and well calculated advertising which the Canadian 
 agricultural department and the High Commissioners' staff
 
 78 COMMERCIAL FEDERATION. 
 
 have carried on for years. The preferential tariff was a con- 
 tribution to Imperial unity, and those who see in increased 
 sentimental purchases an adequate return for the Canadian 
 concession have little knowledge of what the colonies hope. 
 So far indeed no other concession than this has been made ; 
 but it stands with English honour that some adequate return 
 should be made. 
 
 There shouj.d be no doubt of what the colonies desire. 
 Three years have passed without a sign and many are grow- 
 ing impatient. But there has been no abatement of the de- 
 sire. No Canadian would dare to say he did not desire a 
 preference in the English market and no one is likely to say 
 it. The only difference is that many are tired waiting for 
 England's own time, while others still have confidence, or say 
 they have confidence, that the mother country will sooner or 
 later see her way clear to make the necessary concession. 
 Should England make no effort to carry out her side of the 
 implied obligation there would be great disappointment in 
 Canada and the event would be fatal to the prestige of the 
 party which did not exact terms when it might have exacted 
 them without difficulty. The Conservative party in Canada 
 oscillates in this matter between a sneer at a fraudulent con- 
 cession which does not mean increased British imports and a 
 denunciation of the Liberal party as traitors to the interests 
 of Canada — positions which are hardly consistent with each 
 other, unless it be taken for granted that a fraudulent conces- 
 sion should have been made the basis of a demand for a real 
 preference in the British market. But it is firm on this point 
 that a concession is due from the English people ; and the 
 Liberal party which still professes confidence in Enghsh sense 
 of honour is equally positive and convinced that in time the 
 proper return will be made. 
 
 The action of the mother country in this matter is not 
 merely a Canadian question. It is one in which all the colo
 
 COMMERCIAL FEDERATION 
 
 nies are interested. While no one of them would care to 
 adopt the abandoned position and try to extort a concession 
 in return for a concession, the fact that England had made 
 no return and was prepared to make none would have a large 
 influence on their course of action. Increased purchases will 
 not be regarded by any colony as England's equivalent. Nor 
 will it do to point to England's expenditure on commerce and 
 defence of which the colonies have the benefit. Gratitude, in 
 politics at least, is a sense of favours to come ; and in any 
 case the question of defence stands by itself and is a problem 
 for which, as the events of last, year showed, a solution is 
 being found. 
 
 The inaction of the mother countr}- is fortunately not due 
 to any lack of appreciation of the preference offered. Criti- 
 cism on that score has been confined to quarters from which 
 criticism can come without a breach of good taste. It is per- 
 fectly open for Canadians to point out that the concession has 
 not been followed by any tangible results for British trade. 
 There has been no proportional increase of imports into 
 Canada from Great Britain; and Canada has largely in- 
 creased her purchases from the United States and even from 
 Germany. This is fair enough criticism, but those who make 
 should remember that the quid pro quo is still to be obtained, 
 and is not likely to be so substantial as it would be, had the 
 impression not been created that the preference, if not frau- 
 dulent, is more in name than in fact. The effects on trade 
 are what might have been expected and an anonymous letter 
 writer to the New York Sun in June 1897 pointed out that the 
 so called preference would not materially affect American 
 trade with Canada. Great Britain and the United States are 
 as Sir Charles Tupper used to show, in no real sense com- 
 petitors for the Canadian market. The bulk of what Canada 
 buys from the United States she could not buy from Great 
 Britain; and the increased imports from the United States
 
 80 COMMERCIAL FEDERATION. 
 
 under a tariff which gives a preference to Great Britain are 
 due to the revival of industrial activity in Canada. The real 
 competitor of Great Britain in the Canadian market is 
 Canada herself. Textiles form more than half of the Cana- 
 dian imports from Great Britain ; and except in cottons the 
 quantity of textiles imported from the United States are neg- 
 ligeable quantities. But the output of Canadian mills far 
 exceeds the imports of textiles from Great Britain. In 1891 
 the output was nearly 17 millions of dollars and the imports 
 from Great Britain in the same year (and since then there has 
 been a marked decrease) amounted ton millions only. The 
 preference to English goods was really little more than a 
 slight diminution of the protection given the Canadian manu- 
 facturer against his English competitor. And this twenty-five 
 per cent, reduction was not a clear reduction. The tariff rate 
 was lirst of all raised ; and though the net result was a reduc- 
 tion it was not a reduction of twenty-five per cent. The rate 
 on printed cottons was raised from thirty tO' thirty-five per 
 cent, before the 'preference' came into play. The tariff gave 
 the full twenty five per cent, reduction as against Germany 
 and the United States whence there was no serious competi- 
 tion ; but the net result was a reduction of 3.75 per cent, in 
 the preference which the Canadian manufacturer had' en- 
 joyed.^ In fact the position of the English manufacturer in 
 the Canadian market was not materially improved ; and in- 
 creased imports were not to be expected, if the inevitable de- 
 velopment of manufacturing in Canada had been taken into 
 account. 
 
 This aspect of the preferential tariff may be confidently 
 commended to the consideration of those English dreamers 
 who look for an Imperial Customs Union on a free trade 
 basis. Protectionist sentiment in Canada was so strong that 
 even a Government, elected from a free trade platform, and 
 
 1 Hansard (Canada) Ap. 22nd, 1897, pp. 1197 et seq.
 
 COMMERCIAL FEDERATIOX. SI 
 
 in the enthusiasm of the Jubilee year, found itself compelled, 
 in the act of conceding a 25 per cent, preference, or more 
 properly a 7^-^ per cent, reduction of the protection duty, to 
 take back with one hand half of the gift proffered with the 
 other. 
 
 But the significance of the preferential tariff does not fie- 
 pend on the exact amount of the increase of Canadian im- 
 ports from the mother country, and there has been noi disposi- 
 tion to look at the question from this narrow point of view. 
 The act was of cardinal importance in the history of colonial 
 policy because of its influence of English opinion ; and makes 
 the development of preferential relations within the Empire 
 inevitable because it has opened the way for free and unpre- 
 judiced discussion of the problem. And the problem is of 
 such complexity and involves interests so diverse and so im- 
 mense that the fuller and freer the discussion the better. 
 
 Discussion of the problem has hitherto been too much at 
 random and without an adequate recognition of the difficul- 
 ties and of the limitations which these difficulties impose. 
 The publication of Sir Rawson Rawson's Synopsis of the 
 Tariffs and Trade of the British Empire might have been ex- 
 pected to dispose of some of the glittering generalities which 
 have bewildered the mind. It ought to have led to a recog- 
 nition of the fact that an Imperial Customs Union is, in the 
 strict sense of the word, an impossibility for the British Em- 
 pire. The German Zollverein had a great influence in creat- 
 ing the German Empire; but the units of the British Empire 
 are not in the same position as the constituent states of the 
 German Zollverein. The German principalities were bound 
 together by common economic interests and many of them 
 were shut out from the sea. The interests of the various 
 units of the British Empire are as diverse as their situations ; 
 and the radical differences in their tariffs are the outcome of 
 the striking economic differences between the units. There
 
 82 COMMERCIAL FEDERATION. 
 
 mav be more harmony of interest than the tariffs would lead 
 us to conclude, and as some writers have endeavoured to 
 show ; but it must be remembered that for all practical pur- 
 poses the interests of the colonies must be allowed to be what 
 the colonists think they are ; and their tariffs are the best in- 
 dications of where they think their interest Ues. The British 
 Empire may come in the course of time to have a common 
 tariff but it will come to this happy consummation as the re 
 suit of its immemorial policy of groping from precedent to 
 precedent and not by the adoption of a logical and elaborate 
 plan of consolidation. '^ 
 
 We may lay it down as a cardinal version of 
 colonial policy that no portion of the Empire should be ex- 
 pected to sacrifice what it conceives to be its economic in- 
 terests to promote the good of the rest. We have in the his- 
 tory of colonial policy too many disastrous instances of the 
 effects of the opposite policy. Each unit of the Empire will 
 jealously maintain its right to direct its own economic policy; 
 and it would only lead to misunderstanding and the straining 
 of relations to invade the undoubted right of each to guard its 
 own interests in its own way. We may further lay it down as 
 a rule in the discussion of the question of commercial federa- 
 tion that, in view of this maxim of colonial policy, all pro- 
 posals should follow the lines of least resistance, which in the 
 present instance means that none should be put forward 
 which calls for the abandonment of the traditional policy of 
 any unit of the Empire except on its own initiation. 
 
 Practically all the proposals which have been made can be 
 
 i"A few enthusiasts may have dreamed of or longed for a common British 
 tariff. But they could have had but little knowledge of the difficulties which render 
 such an agreement impossible while the present system of taxation exists throughout 
 the Empire; and the majority of those who desire a closer commercial union and 
 believe it to be within the range of practical politics have a very indistinct knowledge 
 of the interests with which they have to deal and of the obstacles they would have to 
 encounter in comings to any adjustment which would be acceptable to the many 
 members of Empire."— /Jawion.- Synopsis etc., page S-
 
 COMMERCIAL FEDERATION. 83 
 
 reduced to one or other of two types — those which call for 
 Free Trade within the Empire, leaving the further question 
 of protection against outsiders in the obscurity of the back- 
 ground — and those which insist on discrimination within the 
 empire in favour of its own members and against all outsiders, 
 while to the suggestion of free trade within the Empire a 
 negative, or at any rate no positive, answer is given. Both of 
 these proposals offend against the cardinal maxim of colonial 
 policy; and both of them, with singular futility, have sought 
 the lines of greatest resistance. 
 
 The first of the proposed solutions is a purely artificial 
 scheme which has been developed not to meet a demand but 
 to overcome the objection which the British public seemed 
 to have to the alternative proposal. There is no need to con- 
 sider the further question whether it would be possible to ob- 
 tain the consent of the Empire, and in particular of the pre- 
 dominant partner, to a scheme which involved protection, 
 however slight against the outside world. For Free Trade 
 within the Empire, the attractive aspect of the proposal is 
 politically and financially impossible. The colonies, judging 
 from the history of their relations to the mother country, and 
 from their temper, would not for a moment consider a pro- 
 posal which removed the control of their tariff to some com- 
 mon imperial Board of Trade. The outstanding feature of 
 our colonial system is the jealousy with which the various 
 members of the Empire guard their own independence of ac- 
 tion. The interests of the different sections are not harmon- 
 ious and each considers its interests best served when 
 it looks after them itself. These interests seem to the colon- 
 ies to demand a protective policy and even if it were possible 
 to overcome the colonial prejudices in favour of protection, 
 and against Free Trade, the obstinate fact remains that, while 
 the financial conditions of the colonies remain the same, pro- 
 tection itself could not be sot rid of. While for constitutional
 
 84 COMMERCIAL FEDERATION. 
 
 or fiscal reasons the colonies are limited to indirect taxation 
 as the source of revenue, their tariffs must be protective. It 
 is a simple question in arithmetic what the average rate of 
 taxation must be; and whether it be 1 6 or 20 per cent, it is 
 alike protective. It is true that the colonies are not expressly 
 hmited to indirect methods of raising revenue. By the 91st 
 section of the British North American Act the Dominion of 
 Canada is given power to raise revenue by either direct or 
 indirect taxation ; and it has raised revenue by direct taxation 
 But practically the Dominion is barred from levying direct 
 taxes. By section 92 of the Act the Provinces are restricted 
 to direct taxation and it would be more or less an invasion of 
 their sphere for the Dominion to levy direct taxes — a fact 
 which is practically recognised. Indirect taxation must be 
 levied largely on imports, and cannot when the volume of im- 
 ports is small help being protective and protective to a very 
 considerable extent. Even the late Lord Farrer recognised 
 that the Free Trade in Canada was a financial impossibility ; 
 and what is true of Canada is more or less true of the other 
 colonies. For many years to come it may safely be said con- 
 siderations of revenue will stand in the way of a purely re- 
 venue tariff. 
 
 This academic proposal may therefore be ruled out of 
 consideration. It offends against the cardinal maxim of colo- 
 nial policy. The colonies are deliberately protective : it asks 
 them to adopt Free Trade. It requires them to abandon the 
 most fruitful sources of revenue and to surrender that inde- 
 pendence which they so jealously guard. It is not in the 
 line of least resistance for it embodies a policy which, how- 
 ever it might commend itself to the predominant partner, runs 
 counter to the established trade policy of the colonies. The 
 utmost length to which the colonies will go is to place, as 
 Canada has done, imperial trade on a more favourable footing 
 than foreign trade. Even from goods manufactured within
 
 COMMERCIAL FEDERATION. 85 
 
 the Empire the colonies must seek to raise a revenue ;^ and 
 in aJl cases the colonies are likely to insist on retaining con- 
 trol of their own policy. 
 
 There is nothing academic about the alternative proposal 
 It meets a strong colonial demand. One has to live in the 
 colonies, or be a colonist, to realise how strongly their minds 
 are set on obtaining this object of their desire. Canada, in 
 particular, has been so insistent on this particular scheme as to 
 give rise to the suspicion in some minds that her object is to 
 secure through the agency of Great Britain that protection to 
 agricultural produce which her own tariff can only pretend to 
 yield. However that may be, there can be no question that 
 the demand for preferential treatment in the English market 
 is the strongest factor in colonial politics to-day. The colo- 
 nists are passionately in earnest about this matter, in which 
 they see their greatest possibility of development ; and they 
 unhesitatingly read into Mr. Chamberlain's phrases about the 
 undeveloped resources of the Empire an acknowledgment of 
 the justice of their claims. 
 
 This proposal requires as its initial step protection in the 
 different markets of the Empire against outsiders. The fur- 
 ther stage is not considered at all ; and if we must consider it, 
 the reasons why Free Trade within the Empire is impossible 
 as the initial step towards federation are equally strong and 
 vaJid against Free Trade as the second or the ultimate step in 
 the same direction. To this proposal also we must apply 
 the tests whether it leaves each unit in the Empire in full con- 
 trol of its own domestic policy and secondly whether it fol- 
 lows the lines of least resistance. 
 
 iThe Canadian Finance Minister, through the Controller of Customs, claimed 
 that the increase of the duties on printed cottons, etc., with which he prcf.iccd the 
 preferential tariff, was due to the necessity oi raising- a revenue somehow. — Cutiadian 
 Hansard Dfbatrs, iS<)y, page 1 1 ig The Hofmeycr proposal is simply the Can.idian 
 scheme shorn of its concession to Free Trade principle, and complicated by e.ir- 
 marking- the proceeds of the 5 per cent, surtax on goods coming from foreign countries 
 to provide a fund for Imperial defence.
 
 86 COMMERCIAL FEDERATION. 
 
 Technically the proposal meets the first test. It leaves 
 each member of the Empire masters of its own house. 
 Canada has no less a control over her fiscal arrangements 
 since the adoption of a preferential tariff than she had before, 
 and Great Britain would be as well able to manipulate her 
 tariff after granting a five per cent, preference to the colonies 
 as she is at present. The change would come from her own 
 initiation and would involve no interference of the colonies in 
 the domestic affairs of the mother country. The policy 
 involves neither a common treasury nor a common Board of 
 Trade. The example of Canada is conclusive in this respect. 
 Like an Imperial Postal Union an Imperial Customs' Union 
 on these lines implies only concurrent action. 
 
 But it meets the test O'nly technically. There are other ways 
 of exercising control than by direct interference or physical 
 and legal coercion. The mother country would not be free 
 to abandon the policy after its adoption without evoking 
 protests such as she would be unable to meet ; and compul- 
 sion of a very forcible character might be brought to bear on 
 her to adopt the change. And it is necessary to postulate that 
 the proposal should be accepted freely and unreservedly and 
 at her own initiative. Otherwise it does involve, not directly 
 it is true, but still it does involve, interference. with the inter- 
 nal freedom and independence of one of the partners of the 
 Empire. 
 
 When we come to apply the second test whether the pro- 
 posal follows the lines of least resistance, the poUcy most 
 completely fails. It would be dogmatic to say that the 
 mother country could not be brought to consider the sug- 
 gestion ; but it is at least true that nothing could be more 
 problematic than the mother country's acceptance of it. It 
 is idle, and worse than idle, for it raises false hopes, to point 
 to the weakening of Free Trade sentiment in the United 
 Kingdom. It is within the limits of human possibility that
 
 COMMERCIAL FEDERATION. 87 
 
 in some constituencies a majority ctnihi he found for pro ion 
 against goods made in Germany and elsewhere ; and in other 
 places a candidate who declared in favour of a re-enactment 
 of the Corn Laws might be victorious. But these two wings 
 of a possible protectionist party cherish contradictory ideals, 
 and would fall out as soon as they came to practical legisla- 
 tion. Moreover the English protectionist is not necessarily 
 an imperialist, and indeed can only through confusion of min<l 
 be considered an imperialist. It would benefit the English 
 landowner but little to shut out American competition to 
 meet Canadian and Australian. The colonies claim that 
 they are perfectly able to supply all the food that the mother 
 country needs ; and if they are so able, without a rise in 
 price, the British landowner is in no way better off. The 
 ' made in Germany ' protectionists would have very little sym- 
 pathy with colonial demands. They would welcome a prac- 
 tical monopoly of the colonial market, but they would not 
 handicap themselves in competition with Germany and the 
 United States by demanding that the price of raw materials 
 should rise. On the whole there is more hope that the 
 mother country would be induced to make an economic 
 sacrifice to secure a sounder basis for Imperial unity than 
 mere sentiment, than there is that the growth of a protection- 
 ist party in England will secure the desired end; and the 
 colonists should govern their arguments accordingly. 
 
 The concession to the colonial demand must come as a 
 spontaneous concession. If the mother country could only 
 persuade herself to adopt the policy there would be no de- 
 parture from the best traditions of colonial policy. But if 
 the concession be made only to satisfy the importunity of the 
 colonies, and against the protests of a large minority of the 
 British electorate, then concession, however valuable it might 
 prove to Canada o-r Australia or to all of the colonies, would 
 from an Imperial standpoint be a retrograde step. It would
 
 COMMERCIAL FEDERATION. 
 
 bring the colonies back into politics. It would create, as the 
 old colonial policy with its reciprocity in disadvantage 
 created, an English party pledged to restore to the English 
 consumer his abandoned rights ; and the demand for justice 
 to the consumer easily passes over into that ugly phase of 
 public opinion which we know as little Englandism. 
 
 Even so short a length as the movement for giving the 
 colonies a preference has gone, there are not lacking signs 
 that the colonial question is being brought into the arena of 
 party politics. Not the least of the services of Lord Rose- 
 bery to the Empire is that he made it evident that the 
 colonies were not a subject of party disvision ; and not the 
 least of the disservices which Mr. Chamberlain, with his push- 
 ful diplomacy and his new protectionist schemes, is doing 
 the Empire, is that he is forcing the colonies back into politics 
 and making a party cry of an imperial heritage. If he 
 is successful the blame will not be his alone. It will be 
 equally the fault of the Liberal party if they allow his un- 
 scrupulous tactics to force them into such a hopelessly false 
 position. But Mr. Morley and the ' Speaker ' as the organ of 
 the anti Rosebery wing of the Liberal party seems to have 
 hankerings after a purely negative little Englandism. 
 
 If the concession comes as a free will offering, after the 
 mother country has been convinced that it lies with her in- 
 terest to adopt a preferential tariff, the case would be very 
 different. There would then be no danger of the colonies' 
 becoming a party issue in English politics. It would cornc 
 with the triumphant approval of the inhabitants of the United 
 Kingdom, and would form the beginnings of a new and per- 
 manent policy. Canada's concession was so made. No 
 objection whatever was made to the principle. What criti- 
 cism there was at the time, or has been since, was directed 
 against the failure of the Canadian Government to make the 
 concession the basis of negotiations. The concession itself
 
 COMMERCIAL FEDERATION. 89 
 
 was approved from one end of the Dominion to the other. 
 And on that basis only was it wise that such a concession 
 should be maae. On the same basis should a concession 
 be made by the mother country or not at all ; and such a 
 concession only should the colonies desire. Either prac- 
 tical unanimity on the part of the English people or nothing. 
 We have still to consider what probability there is that the 
 mother country will be led to grant the desired concession 
 of her own free will and accord. The answer must be that 
 in this shape and form there is very litde probability that it 
 will even be seriously entertained. The economic sacrifice 
 demanded is too great. It is hardly worth while arguing 
 with those who would have us believe that the preference 
 will make no difference in prices. It is undoubtedly true 
 that the undeveloped resources of the colonies are so great 
 that they could easily, after a time, supply all the wants of 
 the mother country ; and the preference would do much to 
 hasten the arrival of that time But some time must elapse, 
 however quick the development of the colonies — and that 
 time win be long enough to allow a great reaction in public 
 sentiment — and till that development has been secured prices 
 will be higher. In fact, without a rise in price, the develop- 
 ment of the colonies can not take place. The benefit to the 
 colonies depends either on a rise of prices, or on which in the 
 end is the same thing, a quasi monopoly of the home market 
 It is, therefore, hard tO' understand why there is so much 
 desire to show that preferential trade will not cause a rise 
 in prices, unless it be for the not very ingenuous purpose of 
 hoodwinking the English electorate. It is true that the re- 
 lation between wholesale and retail prices is not simple; and 
 instances, temporary and event, might be quoted where retail 
 prices have not followed wholesale prices. But when these 
 instances are closely examined, it will be found that in nine 
 cases out of ten they are instances of retail prices not falling
 
 90 COMMERCIAL FEDERATION. 
 
 when wholesale prices fall. Retail prices usually rise when 
 wholesale prices rise ; and import duties are generally borne 
 by the consumer. Under certain hardly realisable condi- 
 tions of demand, an import duty may be paid by the 
 foreigner; but these conditions are emphatically not present 
 when the articles taxed are the necessaries of life and of 
 industry as they would be under a preferential tariff. If 
 prices do not rise the benefits the colonies hope for can, 
 hardly be realised. 
 
 On the assumption that prices will rise temporarily at 
 least, the sacrifice demanded from the mother country is 
 greater than the colonists have any right to expect her to 
 make. The most moderate and, indeed so far as I knov^ 
 the only proposal which condescends to particulars is the 
 ' Statist ' proposal of Mr. Colmer of the High Commissioners 
 office in London. A three per cent, tax is to be levied on a 
 limited number of articles which compete with colonial pro- 
 duce. Some of these are food stuffs : others are the raw 
 materials of industry ; and Mr. Colmer appears to regard the 
 effect as trifling. Certainly no more moderate tax could be 
 proposed ; and it is even doubtful whether it is large enough 
 to give the desired preference. The disadvantages under 
 which some of the colonies lie in the matter of transportation 
 are too great to be offset by a three per cent, preference. 
 Yet even this moderate tax involves enormously increased 
 taxation. He argues, and many have used the same argu- 
 ment, that a tax of %(i., or at the most Vod. on the four 
 pound loaf is not an alarming tax, and certainly not too much 
 to ask a citizen of the Empire to submit to for such a desir- 
 able end. But such a method of calculating the burden of 
 a tax is entirely fallacious. By a parity of reasoning a shil- 
 ling in the pound is a low rate of income tax ; and as it 
 would be, if one pound only had to pay the tax. But when 
 the rate is levied on hundreds of pounds for many years the
 
 COMMERCIAL FEDERATION. 91 
 
 tax would become so burdensome that English policy would 
 be revolutionised. Similarly a tax of even one half penny 
 per loaf may seem small when one loaf only is considered ; 
 but the real burden of the tax cannot be estimated until we 
 take into consideration the consumption of bread. 
 
 We can in a measure estimate the burden of a tax on food, 
 but the effect of taxation on raw materials is not so easily 
 calculated. It would probably be much greater than an- 
 ticipated. Mr. Gladstone, in his Budget speech of i860, 
 did 
 
 "Not hesitate to say that it is a mistake to suppose that the best 
 mode of giving benefit to the labouring classes is simply to operate 
 on (i.e., to free from taxation) the articles consumed by them. If 
 you want to do them the maximum of good, you should rather operate 
 on the articles which give them the maximum of employment."' 
 
 To impose taxes on the raw materials of industry which give 
 the working classes the maximum of employment would have 
 the opposite effect of doing them the maximum of harm. 
 But it is impossible to estimate how much sacrifice it would 
 demand, though it is obvious that the sacrifice would be great. 
 
 It is easier to calculate the effects of the preferential tariff 
 on food stuffs ; and the proposed tax on wheat, sugar, butter 
 and meat alone, would amount at the least to more than fifty 
 million dollars a year. Authorities on taxation are practi- 
 cally all agreed that an indirect tax is doubled before iC 
 reaches the consumer and on this assumption, or on Mr. 
 Colmer's own admissions, it would be possible to prove that 
 the burden would be xtry much heavier. 
 
 The proposed duty on wheat is ]'j^d. per four pound loaf. 
 The consumption of wheat and flour in the United Kingdom 
 is 354 lbs. per head, or about 90 four pound loaves. This 
 
 'Buxton: Finance and Politics, Vol. I, page 210.
 
 
 92 COMMERCIAL FEDERATION. 
 
 would be a tax of nearly two shillings per head, without 
 taking into account the enhancing of the tax before it is 
 finally paid. The proposed duty on meat is J^d. per 
 pound. The average annual consumption, according to Mr. 
 Mulhall's Dictionary of Statistics, from which these figures 
 of consumption are taken, is 109 pounds. At a farthing a 
 pound the increased taxation would involve an increased con- 
 tribution to the revenue of two shillings and fourpence per 
 head. The consumption of sugar, according to the same 
 authority, is seventy-five pounds per head ; and the proposed 
 tax is one penny per twenty-eight pounds, involving a tax of 
 threepence per head. The tax on butter, of which each in- 
 habitant of the United Kingdom is calculated to consume 
 14 lbs., would at the proposed rate of %d. per lb. imply a 
 payment per head of three-pence half-penny. The total 
 burden on these four articles of food alone — and Mr. Col- 
 mer's modest Ust includes a great deal more than these four 
 articles — would amount to about five shillings per head. We 
 have not taken into account the enhancement of price before 
 the consumer finally pays the tax ; but assuming that he pays 
 no more than the nominal rate in the form of increased 
 prices, he would pay at least five shillings per head. The 
 population of the United Kingdom is 38,000,000, and tha 
 burden of even so slight a preference as three per cent. 
 would give, would amount to nearly ;^i 0,000,000 or fifty 
 million dollars. It would probably be much more even 
 on these four articles ; but that is the least it would be. 
 Mr. Colmer proposes to remit the present duties on tea 
 and cofft.'e, and he anticipates that a certain amount of 
 revenue would be collected on the food stuffs he proposes to 
 tax. In that case the sacrifice demanded and involved in 
 the taxation might be reduced to about forty million dollars 
 per annum. And this is part only of the sacrifice de- 
 manded. Other food stuffs are to be taxed, and no account
 
 COMMERCIAL FEDERATION. 93 
 
 can be taken of the taxation on the raw materials of in- 
 dustry. 
 
 The benefit to the colonies would need to be very great \ 
 to justify them in demanding such a sacrifice ; and in spite i 
 of the conviction of the colonists that they would be enor- 
 mously beaelitca it is doubtlui whether the benefit would be 
 as great as they imagine. The colonies are strongly pro- 
 tectionist in sentiment and policy ; and the aim of their 
 policy is to build up manufacturing industry within their own 
 borders. Yet preferential trade would undo much of the 
 labour of the past quarter of a century. .vlanufactures 
 would languish, not so much because of English competition, 
 as because the labour and the capital of the colony would be 
 diverted to the extractive industries, where there would be 
 the prospects of higiier wages and iiighcr protits. Uy tho 
 natural process of trade and competition each colony would 
 concentrate its energy on the production of raw materials, 
 and " hewers of wood and drawers of water " the colonies 
 would by their own acts most certainly become. Agricul- 
 ture would flourish exceedingly, no doubt, and there would 
 probably be a great intiux of population to exploit the un- 
 developed resources of the coionies. But this prosperity 
 could not be without its drawbacks. There would be a 
 land boom and speculation everywhere ; and experience has 
 taught us that a land boom generally has disastrous effects. 
 The whole business of the colonies would rest on an insecure 
 basis. Every enterprise and investment would depend on 
 the continuance of English goodwill ; and in view of the 
 sacrifice which the policy demands from England, there would, 
 for a long time at least, be a danger of reaction in English 
 politics. It is doubtful whether in the long run the colonies 
 would be much better off than they are at present. Higher 
 profits, due to the possession of a monopoly, might lead to 
 wasteful and extravagant habits as it did under the old 
 preferential tariff.
 
 94 COMMERCIAL FEDERATION. 
 
 Both the proposals which have been made with a view 
 to securing the commercial Federation of the Empire must 
 then be rejected. They either involve interference with the 
 internal liberties of the different units of the Empire; and 
 assume that the very diverse interests of its members ought 
 to be forced into harmony, thus violating the fundamental 
 maxim of a sound colonial policy ; or they demand sacrifices 
 of some members, involving departure from established 
 policy, thus acting along the line of greatest resistance and 
 rendering the achievement of a most desirable end, difficult 
 if not impossible. 
 
 But it does not follow because these proposals must be 
 rejected that nothing can be done. We cannot go on in the 
 present way. The demand for preferential treatment is 
 the outcome of a wide desire to^ secure closer relations be- 
 tween different parts of the Empire. And since Canada has 
 led the way in giving practical effect on her side to this 
 demand, in some way or other the mother country must 
 follow suit in doing her part. The end to be gained is not 
 merely commercial. Closer and mutually beneficial com- 
 mercial relations are as sure a way of strengthening political 
 relations as any other ; and since the grant of responsible 
 government, perhaps the only way available for the mother 
 country. It is a question simply which is the easiest, which 
 is the most practicable, which is the way that leads most 
 directly to the desired end. The colonies have been almost 
 pedantic in their insistence that there is only one way 
 of securing that end. They have ignored the difficulties 
 which stand in the way of the mother country making 
 the concession in the form and the manner they desire. 
 They have asked her to reverse her established policy, and 
 to sacrifice what for fifty years she has conceiv^ed to be her 
 interest. The mother country has long since given up any 
 desire to control the internal policy of the colonies. The
 
 COMMERCIAL FEDERATION. 95 
 
 colonies have not yet learned that they, too, must show the 
 same consideration. The course for the colonies to pro- 
 mote closer commercial relations is easy, for they have been 
 accustomed to tariff manipulations. But the course for the 
 mother country is not so clear. 
 
 The difficulties of the situation, however, are almost en- 
 tirely the result of the rigid insistence on the part of the 
 colonies on getting the kind of concession they themselves 
 are able to give; and thc-y have jeopardised their end by 
 insistence on their own suggestions. What is essential to 
 the colonies is that their goods should command the English 
 market, that in some way or other they should have a pre- 
 ference. How that preference should be given is a matter 
 of little importance to them so long as it is given. A 
 preTerence may be given to the colonies in either of two ways 
 by making it harder for the nations whose products com- 
 pete with colonial goods to get into the English market, 
 that is, by discriminating against the foreigner, or by making 
 it easier for the colonies to place their goods there, that is, 
 by reducing the cost of transport, etc. There are two sorts 
 of obstacles to trade, natural and artificial, those which men 
 exert their energies to overcome, and those which they them- 
 selves create, often as they remove the obstacles placed by 
 nature, the natural difficulties of distance and the artificial 
 hindrances in the shape of duties. England refuses and is 
 likely to refuse to create artificial obstacles. It is against 
 her established policy and against her manifest interest. 
 But she has no policy against the removal of natural ob- 
 stacles, and it is in line with her interests to remove them. 
 There is therefore no prejudice to be encountered in seeking 
 to give the colonies easier access to her markets; and if 
 she were asked to grant subsidies to freight steamers running 
 between England and colonial ports, she could at least 
 readily consider the policy. The required preference could
 
 1 
 
 96 COMMERCIAL FEDERATION. 
 
 thus be given, following the lines of least resistance. 
 Colonial development would be furthered, as much and as 
 quickly, by cheaper freights as by a discriminating duty ; and 
 since the concession does but little violence to any British 
 prejudice, and does no injury to British trade interests, it 
 ought to be all the more welcome to colonies, especially as 
 in this form it is likely to be permanent. 
 
 This form of concession would best serve the end to pro- 
 mote which commercial federation is sought. By improv- 
 ing communication it would bind the parts of the Empire 
 more closely together. Commercial federation by means 
 of improved and cheaper freights and communications ! 
 This proposal is not in the grand manner, but it is practi- 
 cable. It violates no established policy which has not 
 already been often set aside. The Imperial Government 
 offered to subsidize the Canadian Fast Line, and made noi 
 pretext for the subsidy that it was necessary for the carrying 
 of the mails or for strengthening the navy. It not only 
 leaves the mother country free to control her own trade 
 policy, according to her own conception of her interests, thus 
 following the line of least resistance ; but it would have the 
 further effect of promoting British trade at a comparatively 
 small cost. 
 
 If the concession in this form be not sufficient, there are 
 a dozen other ways in which the policy can be carried out. 
 Imperial penny postage we already have in part, and there 
 are all British cable lines to be constructed, which are de- 
 sirable for commercial as well as for military reasons. The 
 present cable monopoly presses heavily on Australian trade, 
 and the construction of Imperial lines would greatly 
 strengthen and extend the hold the colonies have on thei 
 market of the mother country. Again the Imperial Govern- 
 ment could assist in making colonial goods better known to 
 the English consumer. Permanent colonial exhibitions
 
 COMMERCIAL FEDERATION. 97 
 
 could be established at government expense in various cen- 
 tres of population. The improved consular reports might 
 give information regarding possible openings for colonial as 
 well as English products. The Imperial Government could 
 make a point of buying its military and naval supplies so fax 
 as possible in the colonies. The restrictions which prevent 
 trustees from investing trust funds in colonial government 
 securities might be remo>ved altogether to the advantage not 
 only of colonial credit — and it should be remembered always 
 that the apparently heavy debts of the colonies are, directly 
 or indirectly, to a large extent first-class investments — but 
 also to the advantage of the money market at home. 
 Further the Imperial Government might within limits guar- 
 antee colonial government debts, and thus permit their con- 
 version into 2], 2 per cents. It might even go further and 
 make loans for the construction of great public works like 
 the Canadian Pacilic railway; which the late Mr. W. E. 
 Foster considered a wise policy.^ it might do more than 
 it does to promote emigration, and divert to the self-govern- 
 ing colonies that stream of emigrants which the colonies 
 grudge to see flowing towards the United States. What 
 the colonies need above all is the surplus living capital of 
 the United Kingdom. Without a great influx of population 
 they cannot hope to develop the enormous national resources 
 which they are only beginning to touch. It is true, as I 
 have shown elsewhere, that immigration is a consequence 
 rather than a cause of prosperity.- But in the case of the 
 colonies every element of prosperity and development is 
 present but the population to carry them forward. There 
 might with great advantage to both parties be an imperial 
 and colonial partnership in promoting emigration to the self 
 governing colonies. 
 
 iProc. Royal Col. Inst.. Vol. XI, pag:e 51. 
 2 Davidson: Bargaia Theory ot Wages, c. vi.
 
 98 COMMERCIAL FEDERATION. 
 
 These are not heroic measures, but they would secure the 
 end in view. They have the further advantage that they 
 cannot provoke retahation. The preference they give to the 
 colonies will be as real as the preference by discriminating 
 duties. Foreign nations, however, will have no pretext for 
 complaint. They may attempt to meet the competition of 
 our colonial goods in the common market by subsidizing 
 steamers to carry their products ; but they will have to do 
 so at their own expense, and most of them would have to 
 subsidize British vessels for the benevolent purpose of making 
 goods cheaper to the British consumer. This policy would 
 have the effect of cheapening both food and raw materials, 
 and would not reduce the power of the manufacturers in the 
 old country to meet foreign competition. It would, there- 
 fore, be a permanent policy, because not likely to provoke 
 a reaction. The cost would be plain and visible, and the 
 incidence of the burden of the necessary taxation would be 
 determined. The present system of taxation and trade 
 policy would remain untouched. From the colonial point 
 of view the preference in this shape would be more advan- 
 tageous. It would produce no sudden boom. Develop- 
 ment would be rapid but secure, and the goodwill of the 
 English electorate, on which any industrial progress of the 
 colonies that resulted from a preference would depend, would 
 be practically assured ; for the policy being in^ accordance 
 with the principles, the prejudices, and the interest of the 
 predominant partner would meet with her most emphatic 
 approval. 
 
 The main question, however, is would it be effective? A 
 policy may be good in the abstract, may be practicable for 
 the giver but if it does not secure the desired end it is 
 worthless. The concession is required to meet the colonial 
 demand. Will a reduction in the cost of freights and an 
 improvement of the means of communication be in any sense
 
 COMMERCIAL FEDERATION. 99 
 
 an equivalent to a preferential duty? The colonies want 
 the English market for themselves. Would this proposed 
 concession give it to them. Mr. Colmer proposed a three 
 per cent, preference, and even the most extreme colonial 
 demand is for a five per cent, duty on foreign goods. Can 
 freights be so reduced by means of subsidies so as to give an 
 equivalent preference? 
 
 To ask the question is sufficient. It is hardly possible 
 to over estimate the inlluence of the cost of transport and 
 the existence of transport facilities in determining the course 
 of trade. German trade is to a large extent due to the 
 subsidies given to German shipping. The cost may be 
 greater than the increment of trade is worth to Germany ; but 
 Germany does not think so. Transport and other trade 
 facilities have given the United Kingdom, as compared with 
 the United States, the trade of South America. In this 
 case, there is no suggestion of a national preference for 
 English goods. The question is one simply of the facilities 
 afforded for transportation. There has been no subsidy 
 to this branch of trade, ostensibly at least for trade purposes. 
 But the trade goes to English harbours in spite of the 
 greater distance which the goods must be carried. The 
 greatest obstacles which the colonies have to face in the 
 competition for the English market is the greater facilities of 
 transportation which some of their rivals enjoy. The disa- 
 bilities under which the colonies suffer on this account are 
 greater than generally imagined. According to a well 
 informed writer, Australia is at a disadvantage as compared 
 with the United States in competing foT the English wheatj 
 market of no less than seven shillings a quarter ; and Canada, 
 which is nearer by a thousand miles, is owing to the better 
 organisation of freight service to United States ports, at a 
 disadvantage of at least two shillings per quarter.^ 
 
 ' W. J. Harris: The CommerciuL Advantages of Federation : Proc. Royal 
 Colonial Institute, Vol. XIH, pp. 2og-i$i). Mr. Harris, from whose paper the writer
 
 100 COMMERCIAL FEDERATION. 
 
 This lack of oversea transportation facilities not only han- 
 dicaps the colonies in their competition, but by diverting a 
 portion of their trade to United States ports for shipment, 
 reduces the earning powers of their railways, and renders the 
 splendid system of internal communications which they have 
 built up less efficient. 
 
 It is a difficult matter to estimate the cost of such a 
 system of subsidies. But it is safe to say that it would pay 
 the mother country to pay the whole of the present cost of 
 freight on her colonial imports rather than to adopt even Mr. 
 Colmer's three per cent. duty. The freight on all colonial 
 goods shipped to the mother country does not exceed fifty 
 million dollars. The average cost of freight on the world's 
 trade is ten per cent, of the imports. The average on 
 British colonial goods is probably higher, perhaps 15 per 
 cent. The difference between the values exported and the 
 values imported is roughly speaking due to the cost of trans- 
 portation. The self governing colonies of New South Wales, 
 New Zealand and Canada, exported goods (1896) to the value 
 of 144 million dollars, while England imports from them 
 goods to the value of 164 million dollars, a difference of 
 about 14 per cent. The imports from aU the self governing 
 colonies into the United Kingdom (annual average 1892-96) 
 amounted to ;^5o,47 7,000, of which, at the above rate, 14 
 per cent., or about ^7 millions was due to the cost of 
 transportation. If we include the exports from the United 
 Kingdom to these self governing colonists, the value of the 
 
 derived the first suggestion of the proposal outlined above of commercial federation 
 by means of cheaper freights, does not draw the obvious conclusion that shipping 
 subsidies provide the proper solution. He seems to favour, as one of his critics put 
 it, "a protectionist duty on wheat and meat, with a differentiated scale according to 
 the geographical distances from which they come " ; although at one place he 
 approaches the proper solution when he says (p. 220) that " the general feeling of 
 most Englishmen would be rather to give our colonists equal advantages with 
 foreigners, than to punish foreigners for their sakes": here he approaches very 
 nearly to the policy which follows the line of least resistance.
 
 COMMERCIAL FEDERATION. 101 
 
 total trade for the above period was ^84,709,000; on which 
 some £^i i millions was paid in freight. This is practically 
 the amount of the extra taxation which the English consumer 
 at the least would pay under Mr. Cohner's three per cent, 
 tax on four articles alone. The effect on colonial trade 
 would be the same, whether a preferential duty of five p>er 
 cent, were imposed or a reduction; of one third could be made 
 in the cost of transportation. The freight charges we 
 found amounted to 14 per cent. A reduction of one third 
 would give a five per cent, preference. But the cost to 
 England would be between 3 and 4 millions sterling, only 
 fifteen or twenty million dollars. This would not benefit 
 colonial export trade alone. It would benefit equally her own 
 export trade, and a part at least of the cost would come back 
 in the shape of increased trade. No outlay which the 
 British Government could make would be productive of 
 better results ; and these results could be secured without 
 any departure from established policy. 
 
 This suggestion is in accordance with the principles laid 
 down. It involves no interference with the internal freedom 
 of any member of the Empire, and a concession in this form 
 would create no heartburnings at home, because it would run 
 counter to no principle or interest. It would, moreover, 
 secure the desired result, even more fully than the direct 
 preference which the colonies demand. But the policy would 
 need to be explicitly, almost ostentatiously, adopted. Other- 
 wise the colonies might not recognize that a preference in 
 this shape was being given, and might still clamour for a 
 preferential duty. The admission of colonial storks as trust 
 investments was a concession of some importance ; but with 
 the exception of some Canadian Liberals, who are looking 
 for a jusrification of the method of their preferential tariff, 
 there were few who recognized its importance.
 
 ( 102 ) 
 
 CHAPTER IV. 
 CANADA AND THE EMPIRE. 
 
 FEW people, at home or in the colonies, recognise the 
 profound change which has come over colonial senti- 
 ment regarding the Empire. To-day, in Canada, we are all 
 more demonstratively loyal than the inhabitants of the mother 
 country, and are inclined to regard them with a certain pity 
 and scorn on that account. Ten years since our ideas were 
 very different. But the change has been so profound that, 
 recent though it is, it is difficult to find anyone to admit that 
 there has been any change. We are inclined toi think that we 
 always were as enthusiastic imperialists as we are to day. Yet 
 as a matter of fact there has been a profound change. One 
 short decade ago we were so far from being imperialists that 
 there was an active annexation party in our midst. One of 
 our great political parties ran an election on the issue of un- 
 restricted reciprocity, and many of its most influential me:"^- 
 bers were in favour of commercial union with the United 
 States. And many who were then as strongly prejudiced 
 against the republic to the South, as we all are to-day, were 
 in favour of national independence. " Canada First " and 
 " Canada for the Canadians " were popular maxims. If there 
 were little Englanders at home in those days, Canada was full 
 of little Canadians who, however loyal they may have been, 
 were certainly not imperialist in their sentiments. Ten years 
 ago one would not have been very much in error who, judging 
 not of the deep underlying instincts of the race, but of the 
 common expressions of opinion, declared that Canada at 
 least, among the colonies, was not conspicuously fervent in 
 her appreciation of the glories of the British Empire. An
 
 CANADA AND THE EMPIRE. 103 
 
 intelligent and imperial observer like Mr. Greenwood actually 
 declared in those days that French Canada would be the last 
 refuge of Canadian loyalty — a remark which in view of recent 
 events shows either how completely we have changed or how 
 far astray with the rest of us Mr. Greenwood could go. 
 
 It is Canadian sentiment that has changed ; and the 
 evidence that there has been an overwhelming change would 
 be found by comparing the files of almost, any journal in 
 Canada, for 1890. say with its files to-day. Quotations are 
 certainly no criterion. They might be the casual expressions 
 of indi\adual opinion, and by judicious selection it might be 
 possible to quote as much on the one side as on the other. 
 There were imperialist expressions then as there are little 
 Canadian expressions to-dav. But La Fatrie does not make 
 Canada anti-imperialist to-day ; and the waving of the old flag 
 does not prove Canada imperialist then. We must judge of 
 the temper of a people by many signs and indications : and 
 ten years ago Canada seemed to be entering on a course 
 which made for disruption rather than for consolidation. The 
 Imperial Federation movement was, as Mr. Goldwin Smith 
 pointed, out, a reactionary movement in Canada : and the 
 idea was even shorter lived in the colonies than it was at 
 home. The London Speaker (Ap. 4th, 1891') seems ver\- fairly 
 to have grasped the situation then. "The Canadian 
 Liberals," it said, "have definitely declared for Commercial 
 Union with the States, and are no longer in a position tO' 
 entertain commercial union with the mother country. And 
 as for the Conservatives, the backbone of the party consists 
 of manufacturers who would be ruined by the competition of 
 English goods." Let us speak of something else, it con- 
 temptuously concluded ; and in these ten years we have been 
 talking of nothing else. Both parties have adopted com.mer- 
 cial union as their programme — but not commercial union 
 with the United States ; and as then the Speaker could
 
 1 
 
 104 CANADA AND THE EMPIRE. 
 
 see little difference between them in their practical opposi- 
 tion, so now we can see little difference between them in their 
 practical acceptance of the idea thus summarily dismissed. 
 The change towards the subject of commercial union is 
 typical of the change towards the imperial idea. 
 
 It may seem to contradict this idea that the Conservative 
 party under the astute leadership of Sir John Macdonald 
 carried the general elections in 1891 by waving the old flag 
 and draping the nakedness of their economic platform in its 
 sacred folds ; and it is true that there was a deep under- 
 lying attachment to the Empire which he was quick to see and 
 to make use of. But even then the expressions of opinion 
 seemed to point in another direction. Had the election come 
 three weeks earlier the Liberals would have been elected and 
 unrestricted reciprocity established. Had the elections come 
 three weeks later the defeat of the Liberals would have been 
 even more crushing. The appeals to the sentiment of loyalty 
 were met with jeers at first ; and it is possible that many who 
 were disinclined to seek disruption openly were themselves 
 but lukewarm in their sympathies. Certainly many who by 
 nature and by training were disposed to be imperialists were 
 not inclined to commit themselves. The contemptuous in- 
 difference of the little Englanders on the one hand, and the 
 arrogance of the great Englanders of the Imperial Federation 
 League on the other hand, were alike disheartening. The 
 break up of that body was one of the most fortunate things 
 possible for the Empire. The loyalty that was demanded 
 from the colonies was loyalty to England, not loyalty to the 
 Empire; and the colonials rather resented the idea that, man 
 for man, the electors of England were their political superiors. 
 
 One must judge of a matter like this by one's own im- 
 pressions ; and an adult immigrant, interested in politics and 
 in the trend of public opinion, has an opportunity of judging 
 which is given neither to the native born nor to the outsider.
 
 CANADA AXD THE EMPIRE. 105 
 
 In 1892, when I came to Canada, one could still hear 
 echoes, not very faint either, of the reciprocity controversy ; 
 and Canada seemed to be considering her future destiny. I 
 remember writing home to an English student of politics that 
 there were two parties in Canada, roughly distinguishable as 
 the American party and a professedly English but really in- 
 dependent party. The distinction was not of much value ; 
 but in the condition of public opinion in Canada then it was 
 an excusable mistake. A newcomer could hardly appreciate 
 the strength of a sentiment which found no expression ; and 
 the opinions which were expressed seemed to point away 
 from imperialism. There was in the early nineties a large 
 section of the Canadian public which agreed more or less with 
 Mr. Goldwin Smith in regarding Canada as an American 
 power. No one to-day is ever accused of being an annexa- 
 tionist. But in those days Goldwin Smith was still a power 
 in the land and his views and opinions were regarded as of 
 sufficient importance to require refutation and denunciation. 
 We denounce those ideas only which we have not risen far 
 enough above to try to understand ; and Canada as a whole, 
 tried by this test, seemed to recognise that she was face to 
 face with the problem of her destiny. To-day the question 
 has been so far settled that no man refers either in praise or 
 blame to Goldwin Smith's ideals. But in 1892 it was neces- 
 sary to refer to them in some way because they were then 
 attractive ideals.^ 
 
 , It would be hard in these times to get any Canadian to 
 consider these ideals. To-day they are exploded, discredited 
 and rejected ideals ; but they had in them at that time the 
 
 il have before me, as I write, a copy of a book called the " Haniibook of 
 Reciprocity." It was part ot my business to make myself as quickly as might be 
 familiar with Canadian problems, and this was the first book I bous^ht in Canada. 
 The careful way in which I find the book is annotated, with remarks queried here and 
 statements underlined there, shows me how important I thought the question to be in 
 1892. The book has a purely antiquarian v,->lue to-day. 
 
 H
 
 106 CANADA AND THE EMPIRE. 
 
 attraction which the phrase manifest destiny always has. Yet 
 with it all and the "Canada First" movement, there was a 
 spirit in man which, though it might not reveal itself on all 
 occasions or to all observers, yet did open up new possi- 
 bilities. It was this underlying loyalty which in the end con- 
 founded all theories and converted the " Canada First " into 
 a " Canada first in the Empire " movement. From the van- 
 tage ground of experience we can see now that this loyalty 
 was the dominant factor in the situation. But it was not so 
 easy to see it then. For it was not perhaps the creed of the 
 politically intelligent ; it certainly was not the creed of the 
 politically outspoken. But it was the creed of the dumb mass 
 of the people and possibly underlay the transient ideals of the 
 others. At any rate it was the sentiment which was to pre- 
 vail, though few observers were able to read the signs of the 
 times. 
 
 Even in the early nineties the old cries were losing their 
 meaning ; and gradually, one knows not how, gradually but 
 completely and irrevocably, the nation swung round from its 
 " manifest destiny " to its manifest duty. The Jubilee year 
 marked the perfect triumph of the Imperial idea ; and in that 
 year the most practical politicians in the world perhaps, re- 
 cognised that the change was complete. The Canadian 
 Liberal party set the seal to the accomplished fact. To-day 
 our old attitude is unintelligible and men even deny that it 
 ever was taken. We no longer complain that we are 
 patronised and that recognition is denied our undoubted 
 merits. We ask no recognition for there are none to recog- 
 nise us. We are part of the Empire, and when Mr. Tarte 
 talks, as he does to-day, about the South African trouble being 
 a purely English question, Canadians, or some of them, in 
 spite of their indignation, have some of the pitying toleration 
 for him that one has for an anachronism. He stands where 
 we, many of us, stood ten years ago, and may, if we have
 
 CANADA AND THE EMPIRE. 107 
 
 patience and he has intelligence, come to share in the ardent 
 imperialism of his fellow citizens. 
 
 The causes of this triumph of imperial sentiment over poli- 
 tical theories may be symbolised in the two names of Grover 
 Cleveland and Rudyard Kipling. President Cleveland was 
 not alone responsible for that growth of anti-American senti- 
 ment which is one of the most distinctive political factors in 
 Canadian life to-day ; nor did Rudyard Kipling alone create 
 the imperial sentiment of the colonies. But each served to 
 give form to chaotic impressions. The Venezuelan message 
 was in fact the burial service of the American idea in Canada. 
 It has been dead for some time. It was now forgotten. 
 Kipling brought the colonists to self consciousness and made 
 them realise clearly for the first time what in a dim way they 
 had long felt, viz., that there was no question of loyalty before 
 them but one of simple self respect. 
 
 As Edward I. was the hammer of the Scots, so Grover 
 Cleveland proved to be the hammer of the Canadians. It is 
 easy to say now that there was no possibility of war over the 
 Venezuelan affair and that the whole excitement was ridicu- 
 lous. But we did not think so then ; and it is doubtful 
 whether any Canadian thinks so yet. At all events we be- 
 lieved that war was inevitable then and we knew that on us 
 in Canada the first and last and awful brunt of war would 
 fall. But there was not one moment's hesitation. A quiver 
 ran down the line and Canadians, one and all, stood ready. 
 It did one good and made one proud of the breed that there 
 should be no question in the face of such an emergency. For- 
 gotten were the old ideas that our interests were on the 
 American continent. It was a quarrel, as one might have 
 said, with which Canada had nothing to do; but we had un- 
 consciously made our choice before the crisis, and when it 
 came we stood proudly forth as British subjects ready to do 
 or to suffer, and we knew that the sufifering at least would be
 
 108 CA^^ADA AND THE EMPIRE. 
 
 ours. The possession of a few square miles of malarial 
 swamp, the allegiance of a few tribes of wandering Indians 
 were perhaps not questions on which to hazard our lives and 
 homes ; but we made it so and announced then so that the 
 world, and we ourselves, could hear it that the Empire's; 
 quarrels were, for ever and always, Canada's quarrels. 
 
 It has generally been assumed that the hammer of the 
 Scots made a nation out of the discordant elements which 
 inhabited the northern half of the island. But historically, as 
 well as on a priori grounds, one can pronounce such a view 
 unfounded. Had Scotland been so disorganised as this view 
 assumes, its manifest destiny, as it appeared to the masterful 
 Edward I., would have been accomplished ; and Scotland 
 merged to its manifest economic advantage in the larger life 
 of the English people. On the contrary, as Mr. Hume Brown 
 has pointed out, Scotland was not at the War of Indep>en- 
 dence a country barely emerged from barbarism with the 
 elements of its population at strife and variance. " With the 
 exception of England, indeed, no country in Christendom had 
 in the same degree (as Scotland) filled out its limits and 
 welded its people .... the War of Independence was 
 to prove that a Scottish nation had really been formed in the 
 long process in which the first step had been taken by 
 Kenneth MacAlpin."^ "It has constantly been said that 
 through their long struggle with England, the Scots were 
 fashioned into national unity : it would be more correct to 
 say that had Scotland not been a nation before, it must in- 
 e\dtably have gone to pieces, in the long ordeal through which 
 it had passed."" 
 
 History is past politics and it would be just as absurd for 
 us to say to-day that Grover Cleveland found Canada tremb- 
 ling on the verge of dissolving her imperial connection ; and 
 
 1 History of Scotland, Vol. I, pp. 129-130. 
 i- ^Ibid, pp. 179-180.
 
 CANADA AND THE EMPIRE. V 9 
 
 by one rash threat changed the current of American history 
 as Edward I. is popularly supposed to have altered the course 
 of British history. For if Scotland had, as Mr. Hume Brown 
 puts it, her dynasty of centuries standing, her national council, 
 her national church, and her national law, Canada, in like 
 manner, had her British tradition which was never so dear as 
 when threatened by the rude bluster of a shirt sleeves' dip- 
 lomat. Scotland had been gradually schooled by many un- 
 successful attempts on the part of England to assert a supre- 
 macy, to be ready to resent the effort to achieve by force 
 what guile had failed to accompUsh. And Canada had been, 
 or what comes to the same thing, conceived herself to have 
 been, the victim of a long series of similar attempts to coerce 
 her. The methods were, of course, the methods of the nine- 
 teenth century. The expedients of the feudal system could 
 not be used but the weapons of trade warfare were used with 
 the same effect of irritating the northern people. Canada 
 was, and is still, economically dependent on the United 
 States ; and the tariff mongers of the Republic had en- 
 deavoured in many ways to assert an economic suzerainty. 
 
 And as there were those who, in the perplexed state of 
 Scottish affairs following the death of Alexander III., thought, 
 and from a cosmopolitan standpoint perhaps thought cor- 
 rectly, that it was a consummation devoutly to be wished for 
 that the old feuds of the two kingdoms should be ended by 
 the union of the two nations, so in Canada there had been 
 many who thought that economically, perhaps also politically, 
 it was desirable that Canada should be absorbed in the larger 
 political power to the south. One can almost hear the Scot- 
 tish Goldwin Smiths declaring that there was not room in 
 the island for the development of two English speaking 
 nations, that the northern kingdom had a great race question 
 to solve and the Anglo-Saxon element in the northern king- 
 dom needed all the help it could obtain from association with
 
 110 CANADA AND THE EMPIRE. 
 
 their English brethren to the south, that trade naturally fol- 
 lowed the lines of longitude and that economic and commer- 
 cial considerations were too important to be set aside in 
 favour of mere sentiment.^ 
 
 But just as the early sympathisers with our supposititious 
 Scottish Goldwin Smith were forced by stress of events finally 
 to declare themselves and to break with England, so the 
 Canadian sympathisers with the American idea have been 
 converted by the persistent commercial persecution on the 
 part of United States politicians, and forced to abandon their 
 annexation or reciprocity platform. And just as Robert Bruce 
 through constant hardship and relentless pursuit, and later 
 through the inspiration of success, gradually rose from the 
 position of a not over scrupulous adventurer seeking a throne , 
 to become the patriot king and almost the patron saint of an 
 adoring people, so Laurier and the Canadian Liberal party, 
 after many rebuffs at Washington, came finally in the exalted 
 sentiment of a Jubilee year to make the greatest contribution 
 of this generation to the realisation of the Imperial idea.^ 
 
 'These Scottish Goldwin Smiths practised more than they preached; but the 
 comment has come later. From Anderson's Origin of Commerce we may take the 
 following (Vol. III. page 26): "And great pity it truly may be said to be, that two 
 nations sprung from the same original stock, speaking the same language, essentially 
 possessing the same religion, and whom Nature seems to have designed for one by 
 being separated by the great ocean from the rest of mankind, should not have sooner 
 pursued their true and evident mutual interests, and thereby have much sooner 
 increased in we:ilth. security and power. If upon the death of Alexander the Third 
 and of his grancicliild. stiied The Maid ol Norway, Scotland had voluntarily united 
 itself to England near five hundred years ago, how much more populous, powerful 
 and rich would both parts ot the island have probably been at this time." 
 
 ■lit has been pointed out to me that the historical view of the character of 
 Robert the Bruce which looks at him as having with success become a good man as 
 well as a great man, which he alwaj s was, is not understood ; and that the suggested 
 ana'.ogy between Laurier and the Scottish king can only appear ridiculous. Between 
 the popular conception of Bruce and the actual Laurier one could make no com- 
 parison ; but between the actual Bruce, as his character is drawn by Mr. Hume 
 Brown, for instance, and the actual Laurier, there is a kind of antithetic parallelism. 
 Bruce was great and became a good king. Laurier has always deserved his reputa- 
 tion for "amiability," and he has certainly made his name historical with the 
 I'rcferential Tariff of 1899.
 
 CANADA AND THE EMPIRE. Ill 
 
 It has been said that one can prove anything by analogy ; 
 but when nothing is to be proved it may be allowable to 
 follow out the analogy which suggests itself between Canada 
 in the latter half of the nineteenth century and Scotland in 
 the latter part of the seventeenth. The economic relations 
 between Canada and the United States are of much the same 
 character as those between Scotland and England in the 
 seventeenth century. Scotland made the same demand for 
 commercial intercourse with England as Canada has sought 
 so often and in vain from the United States. The short ex- 
 perience of free trade which Scotland had during the Com- 
 monwealth period may be compared with Canada's golden 
 age of Reciprocity. The reciprocity was in both cases 
 mutually beneficial, but particularly so to> the northern party ; 
 and in both cases, after a short continuance, it was brought 
 to a sudden conclusion. In Scotland underlying the ecclesias- 
 tical troubles there was a strong desire for a renewal of this 
 free trade with England ; and in the event this desire proved 
 the strongest argument for the Union of Parliaments. In 
 England, however, there was the same commercial jealousy 
 of the gains which Scotland made, or was likely to make, as 
 the United States, with less excuse in the temper of the 
 times, has shown towards Canada. English jealousy wrecked 
 the Scottish Darien scheme as United States jealousy has 
 repeatedly endeavoured as in Alaska and the Behring Sea to 
 check the development of Canadian enterprise. 
 
 The analogy is singularly complete. Canada, like Scotland, 
 was the poorer northern neighbour, and was economically 
 tributary to the Southron. Canada, like Scotland, found a 
 career for her more energetic sons in the wealthier and more 
 developed country to the south. There was, moreover, the 
 same jealousy of Scottish immigration on the part of England 
 as the United States has, officially at least, shown towards 
 Canadian inunigration. Yet, in the one case as in the other,
 
 112 CANADA AXD THE EMPIRE. 
 
 the immigration was an economic necessity to the receiving 
 country. Scotland gave cheap labour and brains to England 
 and Canada has paid the same tribute to her wealthier neigh- 
 bour. 
 
 At one point the analogy breaks down and breaks down, 
 decisively. Scotland and England became parts of one poli- 
 tical unit; while Canada and the United States remain and 
 will remain separate. England desired political union more 
 than the maintenance of commercial monopoly and Scotlaad 
 valued access to the English market at home and in tie 
 colonies more than the retention of a barren political inde- 
 pendence. Both played their strongest card. Scotland by 
 the Act of Security in 1703 refused to ratify the Act of Setde- 
 ment ; and declared that the admitted successor to the Crown 
 of England was ipso facto excluded from the choice of the 
 people of Scotland ; while England in retaliation made the 
 commercial exclusion of Scotland more rigorous than ever. 
 The Union of Parliaments then became inevitable. 
 
 But had Scotland's ancient ally of France been to her what 
 Canada's ancient ally was to her, the issue might have been 
 different. The ancient alliance was dictated by a common 
 hate and common necessities ; but gradually, even in the 
 time of Queen Mary, the spread of Reformation principles in 
 Scodand brought the old alliance into disrepute. There was 
 neither common race nor common traditions between Scot- 
 land and France. There was indeed for Scots the right of 
 citizenship in France, but religious differences had made that 
 a dead letter. France, moreover, did not offer to Scotland 
 such a commercial alternative, as England did to Canada 
 when her suits were rejected by the United States. In short, 
 if France could have been to Scotland what the mother 
 countr}' has been to Canada the issue might have been 
 different, and England have remained a second rate power. 
 Canada's ancient ally was all that France failed to be to 
 Scotland in the crisis of her fortimes ; and the ancient
 
 CANADA AND THE EMPIRE. 113 
 
 alliance in this case, backed up as it was by Southron in- 
 solence, proved too much for manifest destiny.^ 
 
 The Venezuelan message did much to give form and shape 
 to the vague irritation which a generation of rebuffs had 
 created. As time had gone on, the fruitless joumeyings to 
 Washington provoked not regret at the failure but irritation 
 at the snubs received ; and Canada was entering on her 
 maturity and beginning to feel that she couid stand alone. 
 The Venezuelan message was the last straw. It revealed that 
 as a nation we had made up our minds and were ready to 
 meet contempt with contempt and arms with arms. Those 
 amiable enthusiasts who preach at home in the islands that 
 Canada's duty to the Empire is to bring the Anglo-Saxon 
 peoples more closely together must be singularly ignorant of 
 the real Canadian sentiment towards the United States. 
 There are exceptions of course — and in the interests of in- 
 ternational amity it is v.-ell that there are exceptions — but the 
 tone of the average Canadian towards the United States is in 
 the old fashion of Scottish sentiment towards the "auld enemy."' 
 
 But the open threat in the Venezuelan message could not 
 alone have produced the effect it did had there not for years 
 been growing up in Canada a new consciousness of the place 
 which a colony holds in the Empire. Many forces have con- 
 tributed to this development, but the influence of the writings 
 of Rudyard Kipling has been perhaps the strongest of these 
 forces. I do not know the full measure of Kipling's popu- 
 larity in the Empire, but if Canada may be taken as a stan- 
 dard it must be tremendous. Among us he speaks as a 
 
 iThe analogy suggests one curious reflection. Scotland, like Canada, »as 
 formed out of two peoples In the long strutrgle the Celt went under; but in these 
 latter days has enslaved his conquerors. It Is the fashion for even pure Saxon 
 families in Scotland to trace relationship to mythical Highland clans. Will the s.ime 
 phenomenon appear in Canada ? Will the pride of descent from the Loyalist give 
 place to a desire to prove some seigneur or even some habitant to be one's ancestor ? 
 Further, will Sir Wilfred Laurier become the rallying point of Canadian Roman- 
 ticism ? There were during the last few years indications of a growing Laurier 
 mythus, but recent events have probably dispelled these romantic notions.
 
 ]W4''^'Wi^f^W' ■ ' '^^^^^^'^"'^^ '^?!!^7'WW^- 
 
 114 CANADA AND THE EMPIRE. 
 
 prophet ; and the most random utterance of his pen is rap- 
 turously and reverently received, and at once becomes an in- 
 evitable rule of conduct. His merits as a writer do not enter 
 into the question, though, as a matter of fact, we believe that 
 he has no equal. There are few Kipling Clubs in Canada 
 because there is no one to exclude. 
 
 We have heard perhaps enough of Kipling as the Empire 
 builder; and while he has made us all imperialists it was 
 not as an Empire builder that he won our love. To the Eng- 
 lishman he may be the poet of the forward movement ; to the 
 colonist he is above all the poet of the Native Bom, the man 
 who first revealed to us the full glory of our imperial heritage. 
 We had always known the British tradition. England's his- 
 tory was our history and her troubles our troubles. But we 
 stood in the outer court of the Temple, not aliens indeed, 
 but still outsiders ; and there was no one to tell us that we 
 had the right of entry. We were not faithless ; but we were 
 despondent and did not bear ourselves with confidence. We 
 protested our loyalty toO' much and yet regarded the Empire 
 as England's, not as ours. Canada was a dependency, a great 
 self-governing colony if you will, but still a dependency ; and 
 much as we disliked to admit the individual superiority of 
 the men of the islands we did bear ourselves as inferiors and 
 allowed ourselves to be patronised. Kipling brought us to 
 self-consciousness and to self-respect. He made us see that 
 all talk about loyalty to the Empire was a mistaken use of 
 terms because it did not express the truth of the situation. 
 He showed us that the Empire was ours and that colonists 
 had in it not the place of a hired servant but that of a 
 younger son who had not wasted his substance in riotous 
 living in a far country. It is as the poet of the native-born 
 that he has done most for the Empire. He has not only 
 brought the colonies to a perfect passion of devotedness : he 
 has also expressed the thoughts they themselves did not know
 
 CANADA AXD THE EMPIRE. 115 
 
 they cherished. He has, in short, been to the Empire what 
 Burns was to Scotland, the revealer of men to themseh-es. 
 
 Outsiders have often been puzzled to understand why the 
 Scottish people should make so much more of Burns than 
 of Scott, who was a worthier man, and perhaps also the 
 greater genius. The reason is that in Bums the Scottish 
 people found part expression and that he said for them what 
 thev dared not say for themselves. Scott never revealed to 
 Scots their inmost feelings, and to the end of his days was 
 almost as tongue-tied as themselves. Therefore he has not 
 that love which the name of Bums evokes. 
 
 And what Burns did for Scotland Rudyard Kipling has 
 done in part for the Native Born, He has revealed to them 
 the worthiness of their position as well as the grandeur of 
 their heritage. He has taught us that the deeds which won 
 the Empdre were not the haxd hand strokes of war only, but 
 those patient and unheroic efforts by which the colonies are 
 slowly building up out of their virgin resources new strong- 
 holds for the race. He has called a new kind of patriotism 
 into existence, which is pride in work done and results accom- 
 plished, because he has shown us that the tiller of the soil, 
 the miner, and the trapper, and the railroad builder with no 
 visions, is each in his way a true empire builder and a work- 
 man who needeth not to be ashamed of what he is doing on 
 its behalf. 
 
 Some English critics would have us believe that Kipling's 
 vogue will be like the vogue of many another Jingo poet ; 
 and one superior person declares that a single stanza by a 
 certain minor poet called Yeats is worth the whole of 
 Kipling's brutal and bloodthirsty ravings. It may be so. It 
 may be that future generations of Englishmen will appreciate 
 more highly the minor tones of the Celtic fringe than the 
 majors of the Empire ; but till our race has lost its imperial 
 instinct Rudyard Kipling will hold his place. These critics
 
 116 CANADA AND THE EMPIRE. 
 
 have compared him with Campbell, who, except for some 
 imperishable lyrics, is unread and forgotten ; but who that 
 knows the outhers of the Empire would make such, a com- 
 parison. Rule Britannia is still the war song of the Empire; 
 but it did not call a new world of patriotism into existence. 
 It gave expression to a passing sentiment which any cockney 
 snob may feel and feel again. 
 
 But Kipling has done more than this. He has called into 
 active life the dormant forces and motives of the Empire. 
 He has given form to that which before was without form 
 and void. He has made the colonies aware of their inmost 
 feelings and ideals. He knew the colonies better than the 
 colonists themselves did. The rebuke in the following letter, 
 which appears in Mr. Beckles VVillson's, " The Tenth Island," 
 shows from what Kipling has rescued and raised colonial 
 expression. It appears that certain Newfoundlanders were 
 grieved at the poet's omission of St. John from his " Song of 
 the English," and their remonstrance elicited the following 
 letter : " Indeed I am not unmindful of Newfoundland. Per- 
 haps I may know more about it than you think, and, certainly, 
 no man in his senses ever doubted the loyalty of the senior 
 colony. We may leave that, I think, to the Yankees who 
 seem to take comfort from inventing curious fictions of that 
 
 nature But we will make a bargain. I will put 
 
 in a four line verse among the ' Song of the Cities ' if you, 
 on your part, will drop, and influence other people to drop, 
 allusions to the " loyalty " of the " colonies." In the first 
 place, I dislike the word " colonies," and if you look through 
 my verses, you will find I very seldom use it. It is out of 
 date and misleading, besides being provincial. In the second 
 place, there is no need to talk of " loyalty " among white 
 men. That is one of the things we all take for granted — 
 because the Empire is us, we ourselves — and for the white 
 man to explain that he is loyal is about as unnecessary as for
 
 CANADA AND THE EMPIRE. 117 
 
 a respectable woman Lo volunteer the fact that she is chaste." 
 That is the situation in a single sentence. He has ex- 
 pressed what the colonies have long felt and still are feeling. 
 The word " colony " is misleading and provincial ; and there 
 is undying fame for the orator who finds the right word to 
 express the facts as they exist to-day. " The Empire is us, we 
 ourselves," and, therefore, it is needless to protest our loyalty. 
 A dependency may be loyal : colonies, such as Canada and 
 Australia, have long felt that this was not a proper word for 
 them. They use it only in default of a better. 
 
 The colonist has not yet achieved that serene dignity of 
 imperial ownership which the English of the island exhibit. 
 He still protests too much and exclaims too much. It is 
 doubtful whether many Canadians understood the spirit of 
 Kipling's school story, " The Flag of their Country." Certain 
 passages in it must have struck many as rank blasphemy. 
 From no one but Kipling would it have been received with- 
 out violent protest. For we are still at the stage when we 
 perorate like " Mr. Raymond Martin, M.P.," about the old 
 flag, though, thank God, we no longer use it as a party 
 emblem. The flag is always and everywhere in evidence. It 
 is the ambition of every country school-house to own one, and 
 the schoolmistress organises concerts and " socials " to raise 
 the necessary funds to purchase it. No meeting, public or 
 private, may close without a demonstration of loyalty. Staid 
 sober gatherings rise to their feet and sing with immense 
 enthusiasm the "National Anthem"; and I have heard the 
 venerable Chancellor of a Colonial University solemnly pro- 
 pose at the end of a public lecture on " Railroad Nationalisa- 
 tion," that the audience join in singing " God Save the 
 Queen." Even the Women's Christian Temperance Union is 
 infected with the same enthusiasm. Our local branch opened 
 its annual meeting with prayer, reading of the Scriptures, and 
 the singing of the music-hall " Soldiers of the Queen !" This
 
 118 CANADA AND THE EMPIRE. 
 
 new-found expression is sometimes extravagant and intolerant, 
 and we have still to learn that there may be a legitimate 
 diflference of opinion regarding the action or inaction of the 
 Imperial Government. 
 
 But this kind of exuberance will pass away and the colonists 
 will gradually come to see that they are no more loyal than 
 the English of the island because they talk more about it. 
 The important thing is that they are coming to take their 
 loyalty for granted. They are coming to take the loyalty of 
 their political opponents even for granted. During the excite- 
 ment raised by the curious inaction of the Canadian Liberal 
 administration regarding the Canadian contingent for the 
 Transvaal no one ventured to draw an indictment against 
 half a nation. The Opposition naturally regarded the attitude 
 of the administration with what v/e may call chastened sorrow, 
 because they hoped to detach many Liberals from their party 
 allegiance on that account. But no one said, and certainly 
 no one thought, that the party was responsible for the in- 
 action. There was a great deal of indignation expressed at 
 the attitude of various prominent individuals, but it marked 
 the stage Canada now occupies that the most outspoken were 
 members of the government party. The question of loyalty 
 can never again be made a party question because it is clearly 
 seen that loyalty is a matter o£ self respect. The Minister 
 of Public Works was criticised because he had obstructed 
 the realisation of our ideal, " Canada first in the Empire," 
 Few criticised, or cared to inquire about the attitude, of the 
 individual minister. That was regarded pretty much in the 
 same light as the utterances of an individual Nationalist 
 member. His private opinion was hia own business, but it 
 was generally conceived that he had misrepresented Canada's 
 position in an Imperial matter. 
 
 Naturally Kipling's influence has not been wholly good. 
 His teaching is strong meat for men and the diet was perftaps
 
 CANADA AND THE EMPIRE. 119 
 
 too generous. One result is that he will soon have 
 to write a Recessional purely for the colonies. We are 
 getting a little out of hand. We are jingoes to a man. We 
 do not say ' my country right or wrong' as a perfervid patriot 
 once said, we shout 'my country always right' and we do not 
 stop enough to consider. Colonial sentiment may be rec- 
 koned on for many years to come as an accession to the jingo 
 element in the Empire. We are in favour of every forward 
 movement and great was our disappointment when Lord 
 Salisbury refused to declare Egypt a part of the Empire. I 
 know of one map which was coloured red in anticipatiorL If 
 Mr. Chamberlain or another colonial secretary were to de- 
 clare to-morrow for the annexation of some of the German 
 colonies in Africa his action would be applauded by a large 
 number of colonials. We are all in favour of almost any for- 
 ward policy ; and drunk with the contemplation of our vast 
 undeveloped resources and confident in our power to develop 
 them, we would regard any extension of the Empire simply 
 as a pegging out of claims for posterity. Without enquiring 
 into the extent of the burden — which to do us justice wet 
 are ready to share — we are ready to clamour for the 
 annexation of the Yang Tse Valley or the remotest god- 
 knows-where pass or hill fort in the Pamirs. That it is a 
 forward movement is enough for us and those who dare to 
 think otherwise must take the consequences. That the Eng- 
 lish of the island should for a moment tolerate John Morley 
 after he had dared to call us "a pirate empire" is unintelli- 
 gible, that they should listen to him with respect is intoler- 
 able. For good and evil, colonial sentiment is jingo. 
 
 That is part of the exuberance of our newly-found 
 utterance and may correct itself in time. Meantime it is a 
 factor in Imperial politics which must be taken into account 
 When Canada has so far settled down that she can criticise 
 her own ideals, there will doubtless be the same wholesome
 
 120 CANADA AND THE EMPIRE. 
 
 division of opindon here as there is at home, where the forces 
 of expansion and of consoHdation are more or less in balance. 
 
 Perhaps since the outbreak of the war in South Africa 
 it would be hard to- find any one who thought the colonies 
 disposed to drive a bargain for their loyalty. Preferential 
 trade may come or it may not come but the loyalty of the 
 colonies is beyond all question. The sending of the various 
 colonial contingents not only demonstrated the solidarity of 
 the Empire : it also intensified the colonial interest in Im- 
 perial affairs. Had there been no colonial " soldiers of the 
 Queen '' at the front, much less enthusiasm would have been 
 displayed. The result of all the expression of imperial senr 
 timent in the colonies, during the war, has been to prepare 
 the way for the proper consideration of some of the problems 
 which await solution. 
 
 This is true particularly of the problem of Imperial De- 
 fence, and colonial public opinion is ready for the considera- 
 tion of a comprehensive scheme. But those who have to 
 elaborate such a scheme must keep in mind the underlying 
 forces which ultimately govern policies. The colonies are 
 prepared to do as much as is needed, and more even; but, 
 except in the event of a life and death struggle for the exis- 
 tence of the Empire, it is doubtful, whether directly or in- 
 directly, they would hand over the control of their finances, 
 in whole or in part, to the military dictatorship of any Im- 
 perial Council, even should they find representation on that 
 Council. The colonies are, and intend to remain, self-govern- 
 ing communities. In the height of our patriotic paroxysms, 
 in the Spring of 1900, Sir Charles Tupper went almost out of 
 his way, apparently to the embarrassment of many of his 
 own party and tO' the delight of his opponents, to reiterate at 
 Quebec the views he has long held regarding Imperial De- 
 fence. He holds that it is no part of Canada's duty to pay 
 contributions into the Imperial Exchequer; and at Quebec
 
 .«f uuw; 'JTM^- •'(»' 
 
 mm"' 
 
 CANADA AND THE EMPIRE. 121 
 
 he gloried in the part he had taken in destroying the Imperial 
 Federation League, whose programme was that the colonies 
 should contribute to the support and maintenance of the 
 Empire to which they owed everything and contributed 
 nothing. Sir Charles Tupper's contention was that Canada, 
 by developing her own resources, and more particularly by 
 building the trans-continental railroad, had done her duty 
 and her whole duty by the Empire. The old extravaganza, 
 " millions for defence but not a cent for tribute," may be 
 taken as an exaggeration of the attitude which Sir Charles 
 Tupper takes at the present moment. When necessity arises 
 there will be no standing on rights and privileges, but until 
 necessity does arise, there should be no attempt to invade 
 those rights. A daughter goes to the help of a mother in 
 time of need, not because it is a duty, but because she is a 
 daughter; but at the same time she is, and desires to remain, 
 mistress of her own house, managing her own affairs in her 
 own way. 
 
 It is possible that the growing pretensions of the colonies 
 will compel them to do more directly for the defence of the 
 Empire than they have done ; but there can be no doubt) 
 that the instinct of the colonies, and their right instinct, is 
 that the first line of defence must be maintained by the mother 
 country. To this instinct Sir Charles Tupper has given 
 negative expression. The need of the situation is that the 
 instinct should receive positive expression. The military 
 function of the colonies is to form the reserve of the Empire ; 
 and this they can do best by strictly attending tO' their own 
 proper business of developing their own resources. The main 
 factor in the production of wealth is what Prof. Nicholson 
 has called the personal capital of a country ; and in a new 
 country this factor is relatively the more important. The 
 productive capacity of human labour working on the virgin 
 resources of countries like the colonies is very great ; and it
 
 122 CANADA AND THE EMPIRE. 
 
 would be a wanton perversion of function, and a wanton waste 
 of effort, to divert any portion of that labour unnecessarily 
 to purely unproductive employment, such as military service. 
 The blood tax of conscription or of heavy armaments is 
 burdensome, not so much because of what it takes out, as 
 because of what it keeps out of the pockets of the people. 
 
 The military function of the colonies is not tO' maintain a 
 large standing arm, or even to make contributions to the 
 maintenance of such an army elsewhere, but to see to it that 
 they maintain the reserve in good and available order, and, on 
 occasion, to demonstrate to the Intelligence Departments of 
 other powers, as was done by the sending of the contingents 
 to South Africa, that the reserves of the Empire can be in- 
 stantly called out. If, over and above the duty which has 
 been committed to them of maintaining order within their 
 own borders, and the further duty of increasing in wealth and 
 population, the colonies should find themselves ready to 
 undertake some specific and recognizable part of the task of 
 defence, it should take the form of assuming responsibility 
 for the maintenance of some portion of the Imperial Reserve. 
 Thus Canada, for instance, might, without any departure from 
 her policy, and without attracting wealth producers from their 
 more important task, undertake to organize among her fishing 
 population, by means of bounties paid out of the Dominion 
 Treasury, a naval reserve sufficient to re-man the North 
 Atlantic and the North Pacific Squadrons. This would be 
 doing something which needs to be done, while it would 
 involve the very minimum of interference with the real func- 
 tion of the newer portions of the Empire. A scheme of 
 defence which does not take account of the difference of 
 function of the different units of the empire is not likely to 
 succeed. Defence may be of more importance than opulence ; 
 but a system of defence which strikes at the root of opulence 
 is likely to break down in the hour of need.
 
 CANADA AND THE EMPIRE. 123 
 
 The recognition of the importance of this fact does not, 
 however, place any obstacle in the way of the colonies doing 
 as they have done, either at the call of necessity or in 
 obedience to their own enthusiasms, by sending regirnents 
 from the colonies to fight in the regular armies of the Empire. 
 Sir Charles Tupper, who has so persistently maintained that 
 the duty of the colonies is best performed by the develop- 
 ment of their own resources, was one of the first to call for 
 the sending of a Canadian contingent to South Africa ; and 
 he very properly refuses to make a free will offering in a time 
 of national danger the basis for extorting concessions from 
 the mother country. The contrast between the attitude of 
 the two Canadian parties on the two great questions of pre- 
 ferential trade and of imperial defence is very curious. Each 
 seems to have got hold of the correct view of one of the 
 questions, and to have adopted, on the other question, the 
 attitude which one would have expected its opponents to 
 hold. The Conservatives insist on a quid pro quo in the case 
 of trade, and will have nothing to do with the demand for 
 Imperial Representation as the price of sending Canadian 
 troops to South Africa. The Liberals insist that there should 
 be no demand for a quid pro quo in matters of trade — such 
 a demand being injudicious, if not selfish — while, if Mr. Tarte 
 is to be taken as the spokesman of the Liberal party (which 
 is more than doubtful in this instance), thev are desirous 
 of making a free will offering of troops in a time of national 
 stress the basis of a demand for a quid pro quo. 
 
 Mr. Tarte's advocacy is not likelv to commend a polirv of 
 demanding Imperial representation to the people of Canada ; 
 but there is without doubt a strong sentiment in Canada in 
 favour of some sort of Imperial representation. But it is 
 important to understand the true inwardness of the sentiment. 
 Possibly nine men out of ten would gladly see Canadian 
 representatives at Westminster ; but it is to be always remem- 
 bered that it is the honour, and not the responsibility, they
 
 '1 
 
 124 CANADA AND THE EMPIRE. 
 
 covet. What the colonies want out of Imperial representation 
 is recognition, not power. They are tolerably well content 
 with the constitution of the British Empire as it is, and they 
 understand the enormous difficulties which stand in the way 
 of devising and working a new constitution. They would be 
 just as well satisfied if the Agents General were ipso facto 
 members of the House of Lords. In such a way they would 
 obtain the desired recognition and yet avoid the dangers for 
 their own politics. Canadians are not likely to forget the de- 
 terioration which has set in in provincial politics since Con- 
 federation. The better men seek the larger field ; and in the 
 case of Imperial representation it would be the Dominion 
 that would suffer. The truth is that Canada cannot afford 
 to send her good men, and, for her reputation's sake, can- 
 not afford to send her poor men to represent her : and with 
 Imperial representation we should be compelled to impale 
 ourselves on one or other horn of the dilemma. But the 
 essential part of the demand is not the representation at 
 Westminster, but a clearer recognition of the importance of 
 the colonies in the Empire. Whv, for instance, should not 
 colonials receive a larger share of the birthday honours? 
 Why should not the mayors of Toronto and Montreal be able 
 to look forward to a knighthood with the same reasonable 
 assurance as the provosts of Edinburgh or the mayors of 
 Liverpool, for instance, can do. The colonial civic masris- 
 trates mav not be all that we desire in a knisrht ; but who 
 pretends that the knightly qualities are conspicuous in the 
 recipients of these honours at home. A freer recognition of 
 the merits of individual colonists for positions of tnist in the 
 government service at home and elsewhere, would prevent us 
 from contemplating the necessity of climbing " o'er the house 
 to unlock the little gate." As it is, every such honour con- 
 ferred on a Canadian is regarded as an honour conferred on 
 Canada ; and the desire for Imperial representation is little
 
 CANADA AND THE EMPIRE. 125 
 
 more than a desire that Canada should have the honour of 
 having some of her sons seated in the mother of Parhaments. 
 
 If this be the meaning of the colonial desire for imperial 
 representation, there is no necessity of casting the constitution 
 into the melting pot, as some think we must be prepared to 
 do. In spite of all that is said to the contrary, there is no 
 need for any elaborate scheme of reconstruction. We can 
 very well go on as we are so far as constitutional arrange- 
 ments are concerned. The British Empire is not that loose 
 congeries of states which must be more tightly bound to- 
 gether. Publicists talk much of the state as an organism, 
 if ever there was a state which could be described as an 
 organism (which is doubtful) the British Empire may be so 
 called; and those who clamour for reconstruction seek 
 to replace the organism by a dead mechanism between the 
 various parts of which there can be only friction, which must 
 be minimised, instead of a growing life. The Empire is no 
 mechanism to-day. It has its separate organs, each with its 
 own function, and its own life, which yet is the common life 
 of all ; and nothing but harm can come of attempts to bring 
 the various organs of the national Ufe intO' close and un- 
 natural contact. There are many problems still to solve, but 
 they are problems of particulars ; and provided that no cause 
 of friction is introduced they can be solved. But they must 
 ail be solved on the basis of freedom to each unit of the 
 empire to govern its own policy in its own way. Canada has 
 shown the way in the matter of trade, and both parties re- 
 cognize the importance of the accomplished fact. The Con- 
 servatives, while they continue to upbraid the Liberals for 
 having omitted to take advantage of Canada's opportunity, 
 are not likely to undo their work. What they may do is, like 
 the Liberal government itself, to increase the tariff rate on 
 those articles in which the English and Canadian manufac- 
 turers compete, before they bring the thirty-three and a third
 
 "•WTfV^ 
 
 12^5 CANADA AXD THE EMPIRE. 
 
 preference, to which figure Mr. Fielding, without any special 
 reason, has increased the preference. So far as practical 
 poUcy is concerned both parties will act in the same way, 
 for the reason that both parties are at one in their attach- 
 ment and devotion to our common Empire.^ 
 
 iMr. Georg-e E. Foster, House of Commons, Ottawa, Tuesday, March 27, 1900 
 speaking- officially on behalf of the Conservative party, after criticising the Budget of 
 Mr. Fielding, went on to say :— '• But we are told : This preference to Great Britain 
 is now an accomplished fact. When you get into power, what will you do with it? 
 Will you repeal the preference to Great Britain ? That is a question that will be 
 asked ; that is a question that must be answered. My answer to it is this -that 
 certain facts, when once they are accomplished facts, and though they were accom- 
 plished against the wisn of one party, and against what was considered by that party 
 to be a fair and judicious policy, yet, when once they have been accomplished, it 
 becomes a question whether profitably to the interest of ihe country, and to what 
 extent, these accomplished fiicts can be repudiated or antagonized. One thing^ 
 however, is sure— that when the Liberal Conservative party comes into power, what- 
 ever preference is given to the Uriush manufacturer, that party will take care to see 
 that home industries are fairly and adequately protected, no matter what advantage 
 is given to others."
 
 ( ii-'' ) 
 
 CHAPTER V. 
 
 TRADE AND THE FLAG. 
 
 ''T^HE maxim, trade follows the flag, seems to inspire men to 
 1 practical contradictio'ns. Those who believe that it does 
 spend their energy in devising systems of commerce by which 
 trade may be made to do what it already does ; and those 
 who deny its truth find themselves compelled to object to all 
 proposals which seek so desirable a consummation. If the 
 maxim were true, it might form the motto of those who seek 
 to expand the limits of empire ; but it is as frequently in 
 the mouths of those who seek not expansion but consolidation. 
 
 The idea itself is essentially modern. The old colonial 
 policy was inspired by its contrary. The " mean and malig- 
 nant" expedients of the mercantile system were intended to 
 force trade to follow the flag which had it been left to itself, 
 is precisely what it perversely would not have done. The 
 nearest approach to the modern idea was made by Lord 
 Brougham who declared that the restrictions of the old sys- 
 tem were superfluous rather than burdensome ; and even he 
 seems to have considered it the natural course that trade 
 should follow the price list rather than the flag. The colo- 
 nies had only, according to his defence, which, from a poli- 
 tical point of view, therefore, becomes a strong indictment of 
 the O'ld system, been restricted to the market in which they 
 would otherwise have bought and sold. 
 
 The unexpected commercial consequences of the emanci- 
 pation of England's American colonies induced many to be- 
 lieve that the flag was a hindrance rather than a help to trade. 
 " Trade," said Sir G. C. Lewis, " between England and the 
 United States is probably far more profitable to the mother
 
 ^^ 
 
 128 TRADE AND THE FLAG. 
 
 countiy than it would have been if they had remained in a 
 state of dependence on her,"^ and it was as true as it was re- 
 markable that the United States bought twice as much from 
 England as the colonies had done. We should err, however, if 
 we went on to draw the extreme conclusion the little Eng- 
 landers sought to draw, viz., that it would pay to^ cut the 
 painter and turn the colonies adrift. For it does not follow that 
 the trade with the United States would not have grown to the 
 same extent had complete self-government, as we now under- 
 stand the term, been granted instead of independence. What 
 restricted trade under the old colonial system was not the flag 
 but the numberless superfluous regulations. And it is more 
 than possible that, with as much commercial freedom as Ca- 
 nada and Australia now enjoy, the trade of the emancipated 
 colonies with the United Kingdom, had they remained under 
 the flag, would have been greater than it is to day. What the 
 experience of history teaches is not that trade does not follow 
 the flag but that the attempt to compel it to follow national 
 lines is to a large extent destructive of the trade that would 
 otherwise exist. The teachings of history are borne out by 
 present experience. Those nations which continue to place 
 restrictions on the colonial trade do' not engross to themselves 
 so large a share of the import trade of their colonies as the 
 United Kingdom does of hers after having abandoned to the 
 last detail the policy of restriction. Fifty-live per cent, of the im- 
 ports into British colonies come from the mother country ; 
 and the proportion is 63 per cent, if we omit the Straits Set- 
 tlement which does mainly a transit trade. The Dutch East 
 Indies take but one third of their imports, Dutch Guiana 
 about one half from Holland. Portuguese colonies take but 
 one third and the Spanish colonies in 1896 took well under 
 one third of their imports from their stepmother countries. 
 France engrosses her purely colonial market to the extent of 
 
 I The Government of Dependencies (Mr Lucas's Edition) page 218.
 
 TRADE AND THE FLAG. 129 
 
 34.9 per cent. ; and even if we include, Tunis and Algiers, the 
 French share of their colonial import trade is 61 per cent, 
 only. ^ This result is the more remarkable in view of the 
 fact that nations which still retain the old restrictive colonial 
 system in whole or part find themselves compelled to make 
 heavy expenditures to meet the costs of colonial administra- 
 tion. German trade with German colonies amounted to 
 ;^738,ooo. The subsidies which the Empire paid amounted 
 to ;£739,ooo exceeding not only the whole profit of the colo- 
 nial trade but the whole volume of that trade.- The expen- 
 diture of France on her colonies is not quite so barren of 
 commercial results. In 1897 France exported goods to her 
 colonies to the value of ;2{^i 4,330,000 while the net charge im- 
 posed on the French home treasury for the public service in 
 French possessions was ;^4, 500,000, one third of the total ex- 
 port trade and certainly in excess of any possible profit in the 
 colonial trade. '^ The imports into the colonies trom France 
 must be largely to cover administrative expenses. Reunion, 
 for instance, imported, on the annual average 1873-1883, 
 from France goods to the value of 8,737,244 frs. as against 
 goods valued at 15,858,000 frs. from other countries; and on 
 the annual average 1887-91 9,047,000 frs. from France as 
 against 13,724,000 frs. from other countries. But the imperial 
 expenditure of France in the island, according to Budget of 
 1898, was 4,458,000 frs. practically half of the exports sent to 
 Reunion.* Even when the restrictive system is not adopted 
 subsidies and expenses of colonial administration may account 
 for much of the trade which the mother country does with 
 
 lit is not surprising that Professor Flux, from whose paper in the Journal of 
 the Royal Statistical Society, Sept., 1899, these figures are taken, draws as his final 
 conclusion : " The efficiency of the policj' ot exclusive trade privileges to the sovereign 
 state, whether in promoting its own trade or the trade of its colonies, is not 
 conspicuous in the records." 
 
 "i Spectator, Nov. 2Sth, 1899. ^J^urn. Stat. Soc, Sept., 1899. 
 
 'iLeroy Beaulieu : De la Colonisation, page 343. Journ. Stat. Soc. utsupra. 
 Statesman's Year Book, 1898.
 
 130 TRADE AND THE FLAG. 
 
 her colonies. The imports into the Congo Free State for in- 
 stance are derived mainly from Belgium although there is no 
 discrimination in favour of Belgian goods. Out of 16,070,370 
 frs. imported in 1896, Belgium sent 10,204,477 or about two 
 thirds. But at least three million francs of the revenue of the 
 Congo Free Sate was, directly or indirectly, a subsidy from 
 the Belgian treasury.^ 
 
 In cases like these trade will follow the flag as it would 
 follow anything else. Communities do not refuse the goods 
 when gifts are presented or rather forced upon them; and 
 we must make allowance in the discussion for the exports to a 
 colony which represent merely imperial expenditure there. 
 The trade which follows the flag must follow it both volun- 
 tarily and without the compulsion or inducement of imperial 
 subsidies and expenditure ; othenvise no conclusion of any im- 
 portance can be drawn fro'm the facts. 
 
 In short, we must confine our consideration to the trade 
 between self-governing colonies and a mother country which 
 leaves them free to buy where they please and makes no im- 
 perial contribution to the expenses of their administration. 
 We must further restrict the area under consideration. The 
 maxim can be proved or disproved only regarding self-govern- 
 ing communities which would be independent if they were not 
 part of the Empire. In the case of dependencies like India, 
 trade will follow the flag. British trade would be cut off were 
 the British flag to be hauled down. For India, if not a de- 
 pendency of Great Britain, would be under the dominion of 
 some other European power ; and because this \ ower would 
 apply to Indian trade the principles which rule its trade else- 
 where, British trade would be reduced to the narrow limits it 
 has at present in the trade of foreign nations and their de- 
 pendencies. 
 
 Does trade follow the flag when it flies over self-governing 
 
 1 Statesman's Year Book, 1898, page 440.
 
 TRADE AND THE FLAG. 131 
 
 colonies ? The arguments advanced pro and con do not meet 
 each other. One party declares that the colonial is a better 
 customer, man for man, than the foreigner ; and that the colo- 
 nies do the greater part of their buying within the Empire. 
 The other party replies with an ignoraiio elenchi that the 
 proportion of colonial trade to the total trade of the mother 
 country is small and not growing ; which may be argument 
 against handicapping the foreign trade to benefit the colonial 
 but can hardly be regarded as disproving the maxim. For 
 if the colonies buy and sell all, or nearly all, they have to buy 
 and sell, within the Empire, they can hardly be expected to 
 do more. 
 
 The trade of the United Kingdom with her colonies when 
 contrasted with the trade with foreign countries is so much 
 greater as to justify many maxims like Sir Julius Vogel's. The 
 total trade with the United States is 47s., with Germany 24s., 
 with France 35s., per head of the population of these coun- 
 tries ; but when we turn to colonial trade the figure suddenly 
 mounts to 68s. per head of the population of the colonies.^ 
 If we confine our attention to the export trade of the United 
 Kingdom the contrast is still more remarkable. The United 
 States bought British goods to the amount of 13s. lod., Ger- 
 many to 3s. 4d., France 9s. 3d., per head ; while Canada was 
 a customer to the extent of ^2 3s., the Cape and Australia, 
 respectively, to the amounts of £^2 i6s., and ;^8 6s. per head 
 of their population.- An Australian as it has been more 
 picturesquely put is as good a customer to the United King- 
 dom as 16 Americans, and every Canadian is worth more to 
 British trade than 35 Russians. The colonial is almost as 
 good a customer of the British manufacturer as the native of 
 the islands while the average Australian actually buys a greater 
 value of British manufactures than that purchased by the aver- 
 
 iCaldecott: English Colonization, pag-e i86. 
 -Schonbcrg's HanJbuch, Vol. II, page 1075.
 
 132 TRADE AND THE FLAG. 
 
 age Englishman. Indeed it might be said, as it has been said, 
 " England is the only portion of the British Empire that con- 
 sumes foreign goods to any extent, the colonies almost ex- 
 clusively purchasing goods produced within the limits of the 
 Empire itself."^ Whatever justification may be found or not 
 found foT the maxim that trade follows the flag, we have here 
 the very solid fact that a colonial consumer, from whatever 
 cause, is worth more to the United Kingdom than six Euro- 
 pean consumers of whatever nation. 
 
 The conclusion which is immediately drawn from these 
 figures is reached by what Mill called the method of agree- 
 ment. A (Canada) buys more than B (France), C (Cape 
 Colony) buys more than D (Holland). The only difference 
 between A and C on the one hand, and B and D on the other, 
 is the flag and all that the flag implies. The flag is the only 
 circumstance which varies, therefore it is concluded that the 
 flag is the cause of the greater trade. But the argument is 
 not conclusive. The flag is evidently not the only circum- 
 stance which varies. Otherwise how account for the differ- 
 ences between different colonies under the same flag. For 
 Canada takes British exports to the value per head of 43s. 
 only while Australia takes nearly four times as much, i66s. 
 per head. We cannot find the explanation by Mill's other 
 method of concomitant variations, for the flag is the flag in 
 Canada as it is in Australia, and the Canadian is as loyal as 
 the Africander. 
 
 These facts cannot be denied and no attempt is made to 
 impugn them. It is on the practical conclusion only that the 
 disputants come within range of each other. The obvious 
 difficulty is that there are so few of these desirable colonial 
 customers. Whatever may be the case when the colonies 
 have attained their growth, the number of the colonial cus- 
 
 ' Webster : England's Colonial Granaries. Proc. Royal Colonial Institute, 
 Vol. XIII. page »i.
 
 TRADE AND THE FZAG. 133 
 
 tomers, however much they buy, is ver)- small in proportion 
 to the number of foreign customers. Twenty-five per cent, of 
 the total British trade is with the colonies. Twenty-five per 
 cent, of her imports come from the colonies. Twenty-eight 
 per cent, of her exports are taken by the colonies. And when 
 we consider the practical conclusion, this vs a sm.all percent- 
 age for which the United Kingdom is asked to penalise the 
 remaining seventy-five per cent, of her trad,^ The colonies 
 cannot do much more than they are doing. Some of them 
 import eighty per cent, of all they import from the United 
 Kingdom. But the bulk of the trade is small, and it is bulk 
 and not percentage which counts towards a nation's wealth. 
 
 Moreover, the colonial trade is not growing in importance. 
 It is difficult to see how it could when, at present, they take 
 nearly sixty per cent, of all they buy from the United King- 
 dom. Colonial trade has done no more than keep pace with 
 the other trade of the British isles. If the colonies have in- 
 creased in wealth and in population, and buy two and a half 
 times as much as they did half a century ago, at the same 
 rime new foreign markets have been opened up. and old cm'^- 
 tomers among foreigji nations have increased the amount of 
 their purchases, till the foreign trade bears the same propor- 
 tion to the colonial trade as it did fifty vears ago. The facts 
 were put succinctly in u despatch by Lord Ripon to Lord Jer- 
 sey who was chairman of the Colonial Conference at Ottawa 
 in 1894. Tn the period 18^4-58 British imports were in total 
 ;^83o millions of which £ig^ millions were colonial or 2.-^.8 
 per cent, of the whole. During the five years 1889-9^ the 
 total imports were /^2,ii2 millions of which ^^482 millions 
 were colonial or 22.8 per cent, of the whole. The total exports 
 during 18^4-58 were ,/!657 millions of which /^i86 millions 
 were to colonial possessions or 28.3 per cent, of the whole ; 
 and in the neriod 1889-93, the total exports were ^1,^21 mil- 
 lions of which British possessions took ;£438 millions or
 
 134 
 
 TRADE AND THE FLAG. 
 
 28.8 per cent, of the whole. And taking the whole trade, the 
 colonial share in the earlier period was 25.8 per cent, and in 
 the later period 25.3 per cent.^ 
 
 The variations within the period have been slight and there 
 is little direct statiscical confirmation of the common opinion 
 that British colonial trade has grown faster than British for- 
 eign trade. Cons'dering the remarkable development of the 
 colonies during the period since 1854 (the first year of the 
 real as distinguished from the ofiicial values of exports and 
 imports of the L'nited Kingdom) the steadiness of the pro- 
 portions is remarkable. Lord Farrer in his pamphlet " The 
 Neo-Protection Scheme " gives the proportion by five year 
 periods down to 1895, the figures for 1895-98 being taken 
 from the Annual .\bstract of the Trade of the United Kingdom. 
 
 IMPORTS FROM FOREIGN COUNTRIES AND BRITISH 
 POSSESSIONS, 1854-1898. 
 
 Periods. 
 
 Imports from 
 Foreign Countries. 
 
 Imports trom 
 British Possessions. 
 
 Million £. 
 
 Per Cent, 
 of Total 
 Imports. 
 
 Million £. 
 
 Per Cent, 
 of Total 
 Imports. 
 
 1854 
 Annual Average. 
 
 1855-1859 
 1860-1864 
 1865-1869 
 1870-1874 
 1875-1879 
 1880-1884 
 1 885- 1 889 
 1 890- 1 894 
 1 895- 1 898 
 
 118 
 
 129 
 167 
 218 
 270 
 292 
 312 
 293 
 323 
 349 
 
 77-6 
 76-5 
 
 71-2 
 
 76*0 
 78-0 
 77"9 
 76-5 
 77-1 
 77-1 
 78-0 
 
 34 
 
 40 
 68 
 68 
 76 
 
 83 
 96 
 
 87 
 96 
 
 95 
 
 22-4 
 
 23*5 
 28-8 
 24-0 
 
 22'0 
 22 I 
 
 235 
 22-9 
 22-9 
 22"0 
 
 1 Canada Sessional Papers, No. 5B, 1894.
 
 TRADE AND THE FLAG. 
 
 135 
 
 EXPORTS OF BRITISH 
 
 PRODUCE TO 
 
 FOREIGN COUNTRIES 
 
 
 AND BRITISH 
 
 POSSESSIONS 
 
 I 
 
 854-1898. 
 
 
 
 Periods. 
 
 Exports to 
 Foreign Countries. 
 
 Exports to 
 British Possessions. 
 
 
 Million 
 
 c 
 
 Per Cent. 
 of Total 
 
 
 Million £. 
 
 Per Cent, 
 of Total 
 
 
 
 
 
 Exports. 
 
 
 1 
 
 Exports. 
 
 
 i8S4 
 
 6.1 
 
 
 64-9 
 
 
 34 
 
 35" I 
 
 
 Annual Average. 
 
 
 
 
 
 
 
 •855-1859 
 
 79 
 
 
 68-5 
 
 
 37 
 
 3 '"5 1 
 
 I 860- I 864 
 
 92 
 
 
 66-6 
 
 
 46 
 
 33-4 ; 
 
 1 865. 1 869 
 
 •3' 
 
 
 72-4 
 
 
 .SO 
 
 27-6 ' 
 
 1870-1874 
 
 175 
 
 
 7^4 
 
 
 60 
 
 25-6 
 
 1875-1879 
 
 135 
 
 
 66-9 
 
 
 67 
 
 zr^ 
 
 
 1880-1884 
 
 I. S3 
 
 
 65-5 
 
 
 81 
 
 34*5 
 
 
 1 885- 1 889 
 
 147 
 
 
 65-0 
 
 
 79 
 
 35 'o 
 
 
 1 890- 1 894 
 
 156 
 
 
 66-5 
 
 
 78 
 
 33*5 
 
 
 T895M§9?~-^ 
 
 •^■'*'fse***"' 
 
 "^ro-y^ 
 
 ■*■ ^'*w^;u-<-.=ra^;3i»w«4v, 
 
 The variations- within this period have been slight, the only 
 years which depart from the general average to any extent 
 being those between 1865-1875. The impression that colo- 
 nial trade is increasing much faster than foreign trade is due 
 to a mistake in the use of the statistics. When public atten- 
 tion began again, in the early eighties, to be seriously direc- 
 ted to colonial trade, a comparison was made of the propor- 
 tions between colonial and foreign trade in 1870 and 1880. 
 And as Mr. Webster pointed out in the paper from which we 
 have already quoted "the value of the total exports to foreign 
 countries and to our colonies in 1871 and in 1880 was iden- 
 tical ; but whereas in 1871 our colonies took 23 per cent, only 
 of the total sum they received 2>Z P^r cent, in 1880.^ Sir 
 
 iProc. Roy. Col. Inst.. Vol. XIII, page zo.
 
 136 TRADE AND THE FLAG. 
 
 Alexander Gait, speaking at Greenock,^ Jan. 29, 1883, used 
 the same figures to draw the same conclusion ; and from that 
 time dates the mistaken idea that colonial trade is more worth 
 cultivating than foreign trade because it grows relatively 
 faster. 
 
 But it may be answeied there has been an increased de- 
 mand in the colonies fcr British exports which these figures 
 do not show. During the period there were two develop- 
 ments of colonial policy which had the effect of seriously re- 
 stricting British exports to the colonies ; and to maintain a 
 stationary proportion shows in reality an increased demand. 
 Imperial expenditure in the colonies was large at the beginn- 
 ing of the period and is now practically nil. The colonies 
 have been forced to provide for their own defence and, with 
 a few exceprions, imperial forces have been withdrawn from 
 the colonies. The colonial estimates in the Imperial Budget 
 were large and to that extent the exports to the colonies were 
 stimulated at the beginning of the period. In the second 
 place, during the period the self governing colonies have ac- 
 quired the right of controlling their own tariffs and have exer- 
 cised this right to the extent of protecting against the mother 
 country. Many colonial theorists regret that this rieht was 
 cancelled, but as Lord Farrer insists, " Freedom of Trade is 
 only one part of Freedom and not the most important.''^ The 
 concession was granted, and wisely granted, and the effect 
 has been to restrict colonial importations from the United 
 Kingdom. A stationary proportion is thus again equivalent 
 to an increased demand. 
 
 But this latter consideration amounts merely for the fact 
 that the amount of the imports has not increased faster than 
 it has done. It does not account for the fact that the rela- 
 tive proportions of foreign and colonial trade remain un- 
 changed. For* foreign countries have not been behindhand 
 
 '■ iProc. Royal Col. Inst., Vol. XIV, page 407. 
 ' '^The Neo-Protection Scheme, page 14.
 
 TRADE AXD THE FLAG. 137 
 
 in following the colonial example. They, too, have protective 
 barriers against British goods, and these barriers are, on the 
 whole, higher than the colonial barriers ; and if the argument 
 is valid in the one case it must be valid in the other that a 
 stationary proportion is equivalent to an increased demand. 
 Indeed this argument would prove that the foreign demand 
 had increased faster than the colonial demand. "The colo- 
 nies," said Mr. Foster, the Finance Minister of Canada, at the 
 Ottawa Conference, "have all protected against the mother 
 country but none of them have protected as the foreign coun- 
 tries have protected against her. You can take them and 
 make an average. You will find that the protection is far 
 lower in the colonies of Britain against British goods, taking 
 it on the average, than it is in foreign countries."^ 
 
 There is one qualification which must be made regarding 
 this analysis of the trade statistics. The early figures of colo- 
 nial trade represent a period before the colonies had ac- 
 quired or begun to exercise their right of protection against 
 the mother country ; while the early figures of foreign trade 
 are for a period prior to the spread of free trade ideas on the 
 continent of Europe. In short it may be said we are com- 
 paring two periods one free trade and one protective in the 
 case of the colonies ; and two protectionist periods in foreign 
 trade, one practically prior to the continual movement in the 
 direction of free trade and one subsequent to the collapse of 
 that movement. But except that we are thus enabled to ac- 
 count for the variation in the proportions of colonial and of 
 foreign trade the qualification makes no difference in the re- 
 sult. The colonies fell earlier under the protectionist reac- 
 tion. In 1859 Canada came into conflict with the Colonial 
 Office over a protectionist tariff; but in i860 the greatest 
 practical step towards universal free trade was made in Cob- 
 den's Commercial Treaty with France. The protectionist re- 
 
 iCanada: Sessional Papers, No. 58, 1S94.
 
 138 TRADE AND THE FLAG. 
 
 action was a decade later on the continent of Europe. During 
 this decade the colonies took a less proportion of British ex- 
 ports than they had done, and less than they were to take 
 when the protection virus had again infected foreign natio'ns. 
 When the reaction spread to foreign nations they discrimi- 
 nated against English goods more severely than the colonies 
 had done. 
 
 Thus, on analysis, it appears that while the colonies ad- 
 mitted British goods on easy terms and foreign countries taxed 
 them heavily the proportion of British colonial export trade 
 as compared with her foreign export trade was above ^t, per 
 cent. During the decade in which the colonies began to dis- 
 criminate, and foreigners lowered their duries, the proportion 
 fell to 26 per cent. After the reaction set in, and the colcv- 
 nies which still discriminating were yet imposing lighter duties 
 than foreign nations were doing, the earlier proportion was 
 re-established and has since been maintained. The sole vari- 
 ation from the stationary condition can thus be accounted for, 
 and we may take it as established that the colonial trade is 
 not growing in importance relatively to British foreign export 
 trade 
 
 On the other hand, it is true that Imperial expenditure in 
 the colonies has been largely diminished. And to this extent 
 we may grant that colonial voluntary purchases have increased 
 more than the figures show. But against this must be set the 
 fact that in the period under investigation the colonies have 
 been large borrowers of English capital which has been ex- 
 ported largely in the shape of goods. 
 
 The result of this investigation of the direct statistical evi- 
 dence must be a verdict of not proven. The colonist is a 
 better customer than a foreigner, a better customer, in some 
 instances, than the native of the islands ; but, on the other 
 hand, the colonists take but one third of British exports and 
 are doing no better than they did half a century ago. But it
 
 TRADE AND THE FLAG. 139 
 
 must be remembered that the colonies in many cases are 
 doing as well as could be expected and the most exacting 
 could not expect them to buy more than 75 per cent, of their 
 imports within the Empire. 
 
 The maxim that trade follows the flag is frequently used to 
 justify not the consolidation but the further expansion of the 
 limits over which the flag flies ; and as a means to this end 
 and sometimes as an end in itself, to justify an increase of 
 armaments. Countries which have no navy, and conse- 
 quently no colonies, must be content with a restricted market 
 for their exports. Nations like Belgium, Holland and Den- 
 mark admittedly do a large export trade, but this trade is con- 
 fined to the markets of civilised countries where in theor\- at 
 least the foreigner has the same chance before the law courts 
 as the native. Belgium, for instance, imports largely from 
 such countries as Roumania and Peru but her exports to 
 these countries are small. This fact is explained by the im- 
 potence of Belgium to protect her subjects. When Denmark 
 wishes to sell butter to such nations as these it is compelled 
 to employ British middlemen. There is no difficulty in sell- 
 mg in the markets of civilised powers because there they have 
 an assurance of equal justice. But merchants trading with 
 semi-civilised communities have no such assurance land hence 
 a weak nation must be content to miss the world's trade or 
 share it only indirectly. 
 
 But this argument proves too much. Belgium and Den- 
 mark export but little to Australia which as regards civilisa- 
 tion could not even by the most prejudiced Anglophobe of 
 the continent be placed in the same category with Peru. Pro- 
 bably Belgium exports quite a great deal to Australia but it 
 does so indirectly ; and the cause of the roundabout trade is 
 that the volume of exports i5 not considerable enough to 
 justify direct shipment. The development of naval power is 
 not without effect on foreign trade. Xo one pretends that
 
 140 TRADE AND THE FLAG. 
 
 goods can be sold at the point of the bayonet, and the navy 
 will serve rather to maintain than to extend trade in bar- 
 barous regions. The result of adopting this policy is less 
 than the statistics may show it to be. A direct trade may be 
 substituted for an indirect trade with the result of saving com- 
 missions and arbitrage ; a saving which may be very small in 
 comparison with the expenditure in subsidies, etc., necessary to 
 effect it. But while goods cannot be sold at the point of the 
 bayonet, armaments may lead merchants to show greater enter- 
 prise and confidence in pushing trade in hitherto unexploited 
 regions with a result of making the goods they have to sell 
 better known. 
 
 On the whole Adam Smith's dictum that while each nation 
 has managed to engross the inconveniences of a colonial em- 
 pire, the advantages it has been compelled to share with the 
 whole world, is just as true to'-day as it was in the century 
 before his time. New colonies founded to expand trade buy 
 as largely from foreign nations as from the mother countries, 
 while the imperial expenditures on them and in them often 
 exceed the sum total of all their trade. 
 
 The proof of the maxim, which is hardly possible by direct 
 induction from statistics of trade, is sometimes sought by 
 apriori methods. By general concession among economists, 
 the apriori methods are alone productive of results in the 
 consideration of trade problems. The conditions of commerce 
 are so complicated that even the most devoted admirers of 
 the inductive methods in economic study have had recourse 
 toi apriori proof. The question whether trade follows the flag 
 is ultimately a problem in the theory of foreign trade, and 
 before a decision is made all the more important elements 
 which enter into^ the equation of indebtedness should be con- 
 sidered. And there are difficulties peculiar to the present 
 problem which require solution. 
 
 Why should trade follow the flag? One can understand
 
 TRADE AND THE FLAG. 141 
 
 why it should when there is compulsion or a preference given. 
 But when there is none ? It may as well be conceded, once 
 and for all, that the flag does not supersede the ordinary 
 economic motives in buying and selhng. The motives thus 
 symbolised must operate through, and modify or transform, 
 the ordinary desire to make the best bargain. There may 
 be many exceptions to the domination of the economic 
 motive, but it is not wise to generalise from these exceptions. 
 The flag may serve the purpose of advertisement, net in 
 the way the patent medicine vendor uses it so much on the 
 American continent, but because the officials of the govern- 
 ment are directed, or expected, to urge those under their 
 care or their influence to buy the products of the mother 
 country. It is not merely because of discriminating duties 
 that Madagascar buys more from France since the island 
 became a French colony than it did before. French officers 
 and civil servants are instructed to favour French merchants 
 and to push French wares. This is more than an under- 
 standing : it is a direct and official order : 
 
 " I have also to request you to instruct the native authorities to 
 "exert all their influence in favour of the objects at which we are 
 "aiming [to introduce French Products]. It will be easy for them, 
 " from the point of view now before us, to represent to persons living 
 "under their jurisdiction, that tissues ot French manufacture are as 
 "good as similar articles manufactured abroad : that it is only fitting 
 " that the Malagasy, who have now become French subjects, should 
 " conform to our national customs by using our products : that their 
 " clothing thus becomes a distinctive mark of their new position. . . 
 " But they must bear in mind that no obstacles should be placed in 
 "the way of the sale and circulation of foreign merchandise. Your 
 "part, as well as that of your native subordinates, consists simply in 
 "making clear to our new subjects the benefit to be derived from 
 " the purchase of French products, which will henceforward be more 
 "suitable to their habits and wants, which have been mollified in the 
 " last t-wo years by the introduction of French laws and customs. Such
 
 142 TRADE AND THE FLAG. 
 
 " a course is absolutely within our right and no one has any right to 
 " take exception to it."' 
 
 And in accordance with this policy advertisements of French 
 goods are inserted, free of cost to the advertiser, in the 
 columns of the Malagasy journal (the Vaovao.) 
 
 This may be the French way, or part of the French way, 
 of making trade follow the flag (and the Germans also take 
 an eminently practical view of the uses to which government 
 officials may be put), but it is not the way of the " nation 
 of shopkeepers." His Excellency the Governor General of 
 Canada and his aides and secretaries do not carry round 
 with them pocketsful of business circulars advising Canadians 
 to buy Plums' Soap in preference to Jones's Shaving Sticks, 
 as being " more suitable to their habits and wants, which 
 have been modified " by two centuries of English occupation. 
 In British possessions the sale of British goods depends on 
 individual exertion ; and the home government has done 
 nothing to further its development. It may instruct its con- 
 sular agents to advise home merchants of profitable open- 
 ings ; but consular activity is confined to foreign countries 
 and even in the crown colonies government agents are not 
 required to imitate the " illustrious Gaudissart."' Certainly 
 the home government does nothing either in the colonies or 
 elsewhere to induce the native born to consume English 
 goods. 
 
 Those who put forward the answering epigram that trade 
 follows the price fist may laugh at a policy which turns the 
 civil servant into a salaried national tout ; but the policy 
 cannot be devoid of effect. And even without such direct 
 endeavours the flag may encourage trade. Trade follows the 
 price list certainly, but the flag may serve to advertise the 
 
 1 Quoted by W. Ford : The Foreign Policy of the United States, pp. 128-129. 
 The italics are by way of comment.
 
 TRADE AND THE FLAG. 143 
 
 price list ; and there may be circumstances when traders do 
 not care to present their price hsts because of the lack of 
 government protection to their enterprise. The modern 
 divorce of producer and consumer has made advertisement 
 of some kind an economic necessity ; and the fact that the 
 goods in question, other things being the same, have been 
 produced under the flag which the consumer reveres may 
 give the goods that additional publicity which may be all 
 that is needed to induce the consumer to prefer them. Com- 
 mercial travellers, in their moments of candour, readily admit 
 that in nine cases out of ten, as between rival houses of 
 equally good standing, it is personal regard for the traveller 
 that sells the goods. And in international trade personal or 
 national regard may bring about the same result. Reference 
 was made in an earlier chapter to the opinion that increased 
 purchases of Canadian goods is Britain's quid pro quo for 
 the Canadian preference ; and from this point of view the 
 preferential tariff' was simply the crowning act of the long 
 continued policy of advertisement which the Canadian 
 government has been carrying on with a view to capturing 
 the British market. There was, it is true, no prejudice against 
 Canadian goods ; but there was an apparently invincible 
 ignorance of their merits, the effects of which were the same. 
 For many years after Canadian cheese had captured the 
 market, it was sold in the United Kingdom as American, 
 simply because Canada, to the English public, was not even a 
 geographical expression. I remember hearing on one occa- 
 sion a Yankee explain that the sea voyage greatly improved 
 the quality of cheese. American cheese had never, he 
 assured me, tasted so good at home as it did in England. 
 In my innocence I thought it might be that the cheese did 
 suffer a " sea-change " ; and I took occasion later to mention 
 the fact to a British produce broker. He laughed and said 
 the explanation was much simpler.. " All the American
 
 144 TRADE AXD THE EL AG. 
 
 cheese your Yankee friend tasted on this side was made in, 
 Canada." But while the brokers knew it the consumers did 
 not then. This ignorance of the merits of Canadian produce 
 was in part dispelled by the act of Canada in 1897 ; and the 
 flag, and the sentiment it arouses, while it might not induce 
 the English consumer to pay more for an inferior article 
 may induce him to look first at the Canadian price list. 
 
 If by the maxim trade follows the flag it must be under- 
 stood that people will prefer poor and dear goods to cheaper J 
 and better goods simply because the former were manufac- 
 tured under the flag, few would be found to defend it. Sen- 
 timent undoubtedly has a strong influence on trade and 
 patriotism is one kind of sentiment. But its influence is not 
 exerted in this simple way. Its effect is more indirect. It 
 may alter the estimates which people place on goods. Pre- 
 judice and custom may so modify a man's tastes and inclina- 
 tions that he prefers goods made( under the flag. But this 
 is because goods made under the , flag are in themselves 
 different goods from apparently similar articles made else- 
 where. They are different because they satisfy a distinct . 
 want. , 1 
 
 How far human wants are thus modified it is impossible ' \ 
 
 to say. It is almost certain that when there is a distinct 1 
 
 economic understanding human wants are not so modified. 
 The slight measure of success which has attended the efforts 
 of national societies to encourage consumers to use home pro- 
 ductions shows how little, even in retail buying, sentiment has 
 to do with human wants. Under ordinary circumstances 
 national sentiment counts for little in the buying of the re- 
 tailer, and consequently for less in his selling. The un- 
 expected effects of the law regarding the branding of goods 
 " made in Germany " and elsewhere has furnished the starv- 
 dard modern illustration of the incapacity of a legislature to 
 protect trade interests. Under ordinary trade conditions the
 
 TRADE AND THE FLAG. 145 
 
 branding served as an unintentional advertisement which pro- 
 bably had the effect of increasing sales. But in circum- 
 stances out of the ordinary the effect may be different. 
 During the crisis produced by Emperor William's telegram 
 to President Kruger, goods marked " made in Germany " 
 were in many places practically unsaleable. It is true that 
 the trade reports do not show much evndence of a falling off 
 in the demand ; but the crisis was short and traders accom- 
 modated themselves to the conditions by obliterating the 
 marks. Had the crisis lasted longer, the result might have 
 been different. For the trader so long as he has a stock in 
 hand cannot afford to be patriotic, although he may place 
 his future orders as the patriotic sentiment of his customers 
 demanded. 
 
 But under ordinary circumstances the patriotic motive 
 pure and simple does not materially alter economic conduct.^ 
 In fact, in some instances, there is a positive prejudice in 
 favour of foreign made goods, a prejudice which is fostered 
 rather than discouraged by a protective tariff. In the 
 wealthy centres of population, shopkeepers make a point of 
 advertising their stock of English goods for instance, as one 
 may see in Beriin and in New York, Under ordinary cir- 
 cumstances, however, we may take it for granted that people 
 will buy the goods which suit them at the lowest price avail- 
 
 1 Patriotic sentiment, however weak in the individual consumer, may influence 
 the direction of a governments expenditure. The Hon. Mr. Playford, the South 
 Australian representative at the Ottawa Conference, declared that his government 
 felt bound to help other parU of the Empire, even at a loss to themselves " As 
 Minister of Public Works, I have shown my practical sympathy to Great Bntam in 
 the case when Belgian manufacturers offered to supply us with a considerable quantity 
 of rails at a lower price than Great Britain. I recommended my colleagues to give 
 the contract to Great Britain and pay the higher price in preference to giving it to 
 Belgium.'-Canada : Sess. Pap. No 58. 1894. But this patriotic and uneconomical 
 action was exceptional, for in the same speech he showed why his government bought 
 locomotives from Messrs. Krupp. It must, moreover, be remembered that a govern- 
 ment is expected to act as no individual citizen would act in the same circumstances. 
 However, in spite of exceptions, governments wisely, in the interest of the general 
 taxpayer, buy at the best bargain, irrespective of the country of origin.
 
 146 TRADE ASD THE FLAG. 
 
 able, and that those goods will be pressed on their attention 
 which offer the trader the greatest chances of profit. And if 
 trade follows the flag it must be because the flag has the 
 effect of changing human wants or increasing the chances of 
 profit. 
 
 That it has, or seems to have, this effect is undoubted. 
 The flag represents a very important element in modem 
 commerce. It gives confidence, and thus encourages in- 
 vestment. Capital has flowed more freely, and with smaller 
 inducement in the shape of interest, to British colonies than 
 to foreign countries, whose circumstances are similar. The 
 British investor is more certain that his rights will be res- 
 pected in a British colony under an implied, or assumed, 
 Imperial guarantee of equal rights. British capital could not 
 have been discriminated against to the same extent in 
 Quebec as it has been in the Transvaal ; and less capital 
 might have gone to the Transvaal had there not been some 
 assurance that the Imperial government would see justice 
 done to the British investor. Were it possible to determine 
 how much capital is exported from the United Kingdom, it 
 might be made to appear that trade follows the investment, 
 and without doubt the flag influences the investment.^ 
 
 But that is not all. The flag as a trade factor stands 
 for more than trade confidence. It means also a freer out- 
 let for surplus labour. And every emigrant, besides re- 
 lieving an overstocked labour market at home, helps to 
 create and maintain a demand for goods abroad. It mat- 
 ters not where he goes, his prejudices and habits go with 
 him ; and he demands in his new home the goods he was 
 accustomed to use in his old ; and, if as often happens, he 
 improves his economic position by the change, he may 
 demand more of them It is possible that he may not be 
 able to satisfy his desire by obtaining the goods he has been 
 
 iV. Jour. Stat. Soc, Sept., 1899, P^8f6 524-
 
 TRADE AND THE FLAG. 147 
 
 accustomed to use. The goods may not be sold in that 
 market, and his demand may be too feeble to call out the 
 supply. But each emigrant is at least one unit towards 
 creating that intensity of demand. He will not certainly 
 pay more for home goods than for native or foreign made 
 goods if the goods are the same. But the point is, that 
 the goods are not the same, in fact, whatever they be in 
 name. Each emigrant, to the measure of his influence, not 
 only asks for what he has consumed at home ; but forms, 
 so to speak, a centre which radiates prejudices in favour 
 of the goods of the home country. 
 
 So long as his character remains unchanged and he has 
 not been perfectly assimulated by the new community, so 
 long will continue his demand for the home goods. If he is 
 obstinate in his prejudices, it may last a lifetime. If he is 
 easily adaptable, the preference may vanish in a few years. 
 If he stands alone in the new country, his demand may never 
 be really effective; but if he goes to swell the number of 
 fellow exiles, his demand will swell an existing demand. 
 While his prejudices remain, the home goods are the goods 
 which suit him, not on sentimental grounds but on the solid 
 grounds of convenience. 
 
 On a point like this an emigrant may speak with some 
 authority. The adult immigrant brings with him habits and 
 customs which are not the same as the habits and customs of 
 the native born ; and he generally brings with him, too, a 
 disposition to exalt everything that belongs to his old home 
 from its climate to its manner of speech. If he can possibly 
 afford it, after the first novelty has worn off, he Mnll use 
 nothing he has not used at home. He will act as he acted 
 there, clothe himself as he was clad there, and generally con- 
 duct himself as if his conditions had not changed. If he 
 cannot obtain through the ordinary course of retail trade the 
 articles he has been accustomed to use, he will try to make
 
 148 TRADE AND THE FLAG. 
 
 use of what business connections he retains with his mother 
 country; and when the advantage he thus secures is not 
 pecuHar to one in his position, he may be the means of in- 
 creasing the export trade of his old home. For in many 
 cases trade follows the old channels rather than the profit- 
 able channels. Canadians as a rule are content to pay the 
 enhanced American prices for books and calculate on the 
 basis of thirty-five cents, to the shilling. An open demon- 
 stration that Enghsh books can be landed in Canada, duty 
 and postage paid, at an average rate of twenty-two or twenty- 
 three cents, to the shilling, has in many places helped to 
 create a demand for purely EngUsh books. To take another 
 instance, the writer found it impossible to buy Indian tea at 
 his new home. Chinese tea, which then held the American 
 market, was more or less unpalatable ; and he was forced to 
 order directly from England. But now it is possible to buy 
 Indian tea in every grocery store, and there is now no need 
 to order except through the local retailer. 
 
 In time, the immigrant comes to allow the storekeeper to 
 do his ordering for him. Naturally and gradually he accom- 
 modates himself to the customs of his new home; and in the 
 same way awakens to the fact that the world is not bounded 
 by Brighton Beach. His demands for the old goods becomes 
 first indirect and then it begins to weaken. He finds, for in- 
 stance, that EngUsh-made overcoats are not the best for a 
 Canadian winter, and, above all, that the irksomeness of pass- 
 ing goods through the customs does not become less with 
 use. But though the intensity of his demand decreases, it 
 continues in part to the end of his life. 
 
 It is possible, and perhaps probable, that the demand he 
 represents gains in extent as it loses in intensity. But that 
 depends on the kind of man he is, the kind of position he 
 fills in the community, and the attitude he takes to the native 
 bom. He will seldom be able to transmit his solid preference
 
 TRADE AND THE FLAG. 149 
 
 to Ills chuldren. Ihey will carry on their father's demand 
 only in so far as he has been able to modify the environment 
 in which they live. They may retain a sentimental pre- 
 ference ; but the goods which really suit them are those pro- 
 duced in their native countrv'. The habits and the business 
 methods of the second generation are the habits and the 
 business methods of the country. It is, of course, possible 
 that a continuous influx of settlers may keep the business 
 methods, as well as the habits and customs, of the colony the 
 same as those of the mother-land, especially when no other 
 example is kept steadily before them ; and this may be part 
 of the reason why Australia buys more from the mother 
 country than Canada does. To' a large and increasing ex- 
 tent, in matters of trade, Canadians are Americans. Cana- 
 dian business methods are American rather than English, and 
 when Canadian and Englishman trade there is apt to arise 
 a certain irritation due to difference of business methods. 
 American firms make no difficulty about sending goods on 
 approrval or even on credit into Canada. English firms, in 
 the absence of references, require cash with order; and at 
 the moment of writing a first-class London furnishing house 
 has had the writer's cash with order for twelve months and 
 the goods are still undelivered.^ 
 
 If one wished to enter into a competition in epigram it 
 would be possible to contend that trade follows the citizen 
 instead of the flag. And it follows him to the ends of the 
 earth, no matter under what flag he may range himself. The 
 German carries with him his German tastes and customs, 
 and the delicatessen shop is as common in New York as in 
 Berlin. The French in Mauritius continue to buy largely 
 from France and the English in the United States 
 are among the best customers for English manufacturers. 
 
 ' 'This greater rigour is probably in part the cause of the fact that Canada imports 
 nearly four times as much by parcel post from the United States as from England.
 
 150 TKADE AND THE FLAG. 
 
 The Dutch at the Cape and the French in Canada are ex- ' 
 
 ceptions to the rule; but they are exceptions only because 
 the simplicity of their tastes and their poverty prevent them 
 from being consumers of the characteristic exports of the far 
 distant and separated mother countries. French colonies 
 which have long been French buy more largely of French 
 goods than the newer acquisitions ; and the reason is that 
 there is no such body of resident Frenchmen in Cochin China -' 
 
 as in the island of Reunion. German trade with German colo- ." 
 
 nies may be small ; but German exports to Germans under J 
 
 foreign flags represent a large amount of trade. There has 
 been a great deal of emigration from Germany to Southern 
 Brazil and the La Plate Republics ; and as a consequence \ 
 
 the trade of Southern Brazil is almost entirely in German 
 hands. ^ But it is in German hands not so much because of 
 the special aptitude of Germans for commerce but because 
 the 250,000 settlers " welche durchweg ihre Naiionalita 
 bewahrt haben " have retained their German tastes, unmodi- 
 fied by the social environment of the lower races surrounding \ 
 them, and modified only the differences of the physical en- | 
 vironment. \ 
 
 The conditions of trade are complicated, and it might be 
 expected that this relation could not be demonstrated with ! 
 
 statistical exactness. We have to take into account not only 
 the industrial relations of the two countries and the movement 
 of capital between them; but we must also consider the 
 effects of hostile tariffs, of the nearness of other markets, and 
 the modification of demand which arises from the proximity 
 of other influences than those of the mother country. An ' 
 
 Englishman in Canada is dwarfed by the proximity of the 
 United States as an Englishman in Australia need not be. 
 We must also consider how demand is affected by the volume 
 of existing sentiment in favour of the goods of the mother | 
 
 iSchonbergs Handbuch, II, pagre 1105. 
 
 I
 
 TRADE AND THE FLAG. 151 
 
 country. The English emigrant who goes to the United States 
 reinforces a larger demand for English goods than the Eng- 
 lishman who goes to Canada. For there are six or seven 
 times as many people of British birth in the United States 
 as there are in Canada. Again, the wealth of the commu- 
 nity has much to do with the goods it imports. The charac- 
 ter of the exports from the United Kingdom to other civi- 
 lised communities is in the main that of highly manufactured 
 articles of comfort and luxury. The necessaries of life and in- 
 dustry each nation and people supplies from its own resources 
 or else imports them from less advanced nations. Therefore, 
 a wealthy community will be likely to make an intenser de- 
 mand for English goods. The French Canadian has few 
 wants which it is possible for him to supply from France, be- 
 cause the characteristic exports of France do not come within 
 his means. But the French colony in British Mauritius, 
 though even more completely isolated by distance from the 
 mother France, does make a large demand because it can 
 afford to buy largely of French goods to suit the tastes of the 
 local French oligarchy. 
 
 In spite of the sentimental inclination which French Canada 
 has for France, there is but little in common between the 
 French Canadian and the French. Canada may establish 
 commercial treaties with France ; but she imports but little 
 from France, barely half of what she takes from Germany. 
 The relative volumes of imports from France and from Ger- 
 many are as follows : — 
 
 1875. 1885. 1895. 
 
 % of total % of total % of tola 1 
 
 Imports. Imports. Imports. 
 
 France $1,941,298. i '68. $1,935,381. r88. $2,585,174. 2-46, 
 
 Germany 748,423. 063. 2,121,269. 2-07. 4.794,159. 4-56. 
 
 Mauritius buys largely from France, although France is not to
 
 152 TRADE AND THE FLAG. 
 
 any extent a purchaser of Mauritius products. Goods were 
 imported in 1890 to the value of Rs.2,450,789 from France; 
 or about one-seventh of a total importation of Rs. 16, 7 02,8 18. 
 The imports from France were made up chiefly of Boots and 
 Shoes, Dry Goods, Wines and Manures. It is possible that 
 a portion of this volume of imports is re-exported to the island 
 of Reunion, which is, as Leroy Beaulieu says (De la Coloni- 
 sation, &c., p. 242), en quelle sorte dependante de Maurice 
 pour sou commerce. Reunion takes about one-third of its im- 
 ports from France, 1 873-1 882, annual average from France, 
 8,737,244 frs., and from foreign countries 15,858,000 frs. 
 France reserves a preference for her own trade and besides 
 expends about ;^i 70,000 per annum in the service of the 
 island. It is perhaps both an effect and a cause of the large 
 importations into Mauritius from France that the British 
 colony is mainly dependent for her commerce on French 
 steamship lines. 
 
 But notwithstanding the number of conditions which have 
 to be taken into account, it is astonishing how closely the 
 figures of trade correspond to the maxim that trade follows 
 the citizen. When we compare the imports of British produce, 
 into New Zealand, Australia, Canada and the United States 
 with the percentage of the British born inhabitants of these 
 countries we find a considerable degree of correspondence, as 
 the following table shows. The figures are for the last census 
 year : — 
 
 New Zealand. Australia. Canada. U. States. 
 
 Total Imports ... £6,2^0,000 ^33, 555. ooo' $119,967,000 $844,196,000 
 Imports of British 
 
 Produce ... 4,221,000 23,934,000 42,048,000 194,723,000 
 Per cent, of British 
 
 to Total ... 66 71 35 23 
 
 Total Population 2,151,000 3,179,000 4,829,000 66 62j,ooo J 
 British Born 
 
 Population ... 626^000 475,000 2,772,000 
 
 Per cent, of Total 30 27' 9 4 
 
 1 Exclusive of Imports from other Australian colonies. -Partly estimated.
 
 TRADE AND THE FLAG. 153 
 
 The correspondence is not only close but it is easy to make 
 allowance for disturbing causes. New Zealand is, to a cer- 
 tain extent, economically dependent on Australia. She im- 
 ports 17 per cent, of her total imports from Australia, while 
 Australia derives but 5 per cent, of her imports from New 
 Zealand. The disturbing influence of the proximity of Aus- 
 tralia in the percentages is obvious. And in the case of 
 Canada, the sam.e explanation is available to account for the 
 fact that Canada takes less in proportion than the United 
 States does. If further explanation of this difference between 
 Canada and the United States is sought it may be found in 
 the greater wealth of the United States. British- goods ex- 
 ported to Canada and to the United States are toi a large 
 extent expensive manufactured goods, textiles in large degree. 
 
 But if it were possible to consider each country separately, 
 at its different census periods, we might eliminate most of the 
 causes of variation from the normal. Canada's position rela- 
 tively to the United States and the United Kingdom changes 
 but slowly, as manners and customs change and the means of 
 communication are developed. The only changes of impor- 
 tance from decade toi decade are tariff changes, and for these 
 we can allow. Owing to the dearth of statistical information 
 at hand it has been impossible for me to work out this idea 
 with regard to Australia and New Zealand. But the irv- 
 stances of Canada and the United States will sene to illus- 
 trate further the maxim that trade follows the citizen. 
 Changes in 'the percentage of British bom citizens are re- 
 flected in changes in the imports of British produce. The 
 average tariff rate in Canada in the various census years is 
 appended as given in Maclean's Tariff" History of Canada, 
 p. 47 : — 
 
 
 Imports of 
 
 Imports of 
 
 
 British 
 
 Prop, of 
 
 .Average 
 
 
 British 
 
 B P. 
 
 Total 
 
 born 
 
 British 
 
 rate of 
 
 
 Produce. 
 
 per head. 
 
 Population. 
 
 Population. 
 
 born. 
 
 Tariff. 
 
 I86I 
 
 $20,386,000 
 
 $8-io 
 
 2,507,000 
 
 3.14.000 
 
 1330 
 
 20 
 
 187 1 
 
 49,286,000 
 
 '413 
 
 3,485,000 
 
 485,000 
 
 i3"9' 
 
 19.7 
 
 i88r 
 
 42,583,000 
 
 1077 
 
 4,324,000 
 
 470,000 
 
 10-87 
 
 24*5 
 
 1891 
 
 42,047,000 
 
 8 -80 
 
 4,833,000 
 
 475,000 
 
 987 
 
 3i"4 
 
 > Ontario and Quebec only.
 
 154 TRADE AND THE FLAG. 
 
 '4 
 
 The variations from the normal are but slight and no 
 greater than may be fairly accounted for by the changes in 
 the tariff. On the basis of the figures of 187 1, the importation 
 of British produce into Canada should have been in 1881 
 $10.90 instead of the $10.77 per head which stands in the 
 table. But, in the meantime, the tariff had risen from 19 to 
 24 per cent. Similarly in 1891 Canada should have taken 
 $10.00 per head instead of merely 8.80; but in the twenty 
 years the tariff had risen from 19.7 per cent, to 31.4 per cent. 
 
 When we take the corresponding figures for the United 
 States we get practically the same result: — kl 
 
 Imports of B. P. per 
 
 British head of Total 
 
 Produce, total Pop. Population. Population. to Total. Taritt.i .^ 
 
 i860 ;^22,ooo,ooo...$3-5o 31,443,321 
 
 1870 28,335,000... 3-60 38,55*^071 
 1880 30,885,000... 3-00 50,155,783 
 1890 32,068,000... 2*50 66,622,250 
 
 In this case, as might have been expected from the grow- 
 ing weaJth of the country and the steadily growing influence 
 of English ideas, the imports of British produce increase 
 faster than the number of British bom population. If the 
 consumption had been in strict conformity to the dictum that 
 trade follows the citizen we should have found that the per 
 capita consumption, on the basis of the figures of i860, in 
 1870 would have been $3.1 per head instead of $3.6: in 
 1880 $2.8 per head instead of $3.0 ; and in 1890 $2.4 instead 
 of $2.5. But the variation is slight, although the increase in 
 the tariff undoubtedly restricted importation and made the 
 consumption of British produce per head of the p>opulation 
 less than it would otherwise have been. The variation is in 
 the direction one would have expected in a rich country with 
 a growing nucleus of British born citizens. 
 
 'Taussig- : The Tariff History of the United States. Appendix, Tabic I. 
 
 British 
 
 Prop, of 
 
 
 born 
 
 Brit, born 
 
 Average 
 
 Population. 
 
 to Total. 
 
 Tariff.! 
 
 2,199,079 
 
 6-9 
 
 1967 
 
 2,626,241 
 
 6-2 
 
 47-16 
 
 2,772,169 
 
 5*5 
 
 43"<5 
 
 3,122,911 
 
 4-8 
 
 44 '4
 
 TRADE AND THE FLAG. 155 
 
 It may seem little creditable to the English born Canadian 
 that he takes but $io worth of English goods while the 
 emigrant to the United States takes ^lo worth. But the 
 difference is in part due to a difference in the relative wealth 
 of Canada and the United States, and in part to the fact that 
 the absolute, as distinguished from the relative! amount of 
 British prejudice and custom and taste as embodied in British 
 bom citizens, is much greater in the United States than in 
 Canada. The difference, moreover, will not justify us in 
 regarding it as a matter of congratulation thati the British 
 emigrant seeks the United States rather than Canada; for 
 it is to be hoped that we all have got beyond the notion that 
 the sole object of a colonial system is to raise up a nation of 
 customers. 
 
 In conclusion, it may be said that trade follows the flag 
 if the flag may be extended to cover both the capital and 
 the labour which emigrate. Labour does not seem to follow 
 the flag. It rather follows prosperity. Capital is more in- 
 clined to keep within national boundaries ; and the greater 
 mobility of capital in the direction of the colonies gives the 
 maxim trade follows the flag whatever support it has in the 
 facts. 
 
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 Albert Leffinowell, M.D. 
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 interesting."— lKes<mi)is;er Review. 
 
 50. Commercial Crises of the Nineteenth Century. H. M. Hyndman. 
 
 "One of the best and most permanently useful volumes of the Series."— Literary 
 Opinion. -Kt t> 
 
 61. The State and Pensions in Old Age. J. A. Spender and Arthur Acland, M.P. 
 
 " A careful and cautious examination of the question. '—riiiifs. 
 
 62. The Fallacy of Saving. John M. Eobertson. 
 
 " A plea for the reorganisatio.n of our social and industrial system "Speaker. 
 
 63. The Irish Peasant. Anon. 
 
 'A real contribution to the Irish Problem by a close, patient and dispassionate 
 investigator."— Z)oi/i/ Cliromde. 
 
 64. The Effects of Machinery on Wages. Prof. J. S. Nicholson, D.So. 
 
 "Ably reasoned, clearly stated, impartially written."— Lif«rari/ World. 
 
 65. The Social Horizon. Anon. 
 
 " A really admirable little book, bright, clear, and unconventionaL"— £>aifj/ 
 Chronicle. 
 
 66. Socialism, Utopian and Scientific. Frederick Enoels. 
 
 "The body of the book is still fresh and striking."— KaiVj/ Chronicle. 
 
 67. Land Nationalisation. A. R. Wallace. 
 
 "The most instructive and convincing of the popular works on the subject."— 
 National Refnrmer. 
 Sa The Ethic of Usury and Interest. Rev. W. Blissard. 
 
 "The work is marked by genuine ability "—.Vo)-tA British Agriculturalist. 
 
 59. The Emancipation of Women. Adele Crepaz. 
 
 " By far the most comprehensive, luminous, and penetrating work on this question 
 that I have yet met ^tilh."— Extract jrom Jlr. Gladstone's Prrface. 
 
 60. The Eight Hours' Question. John M. Robertson. 
 
 "A very cogent and sustained argument on what is at piesunt the unpopular 
 side." — Times. 
 
 61. Drunkenness. Geokge R. Wilson, M.B. 
 
 " Well written, c-jrefully reasoned, free from cant, and full of souml sense."— 
 National Observer. 
 
 62. The New Reformation. Ramsden BALMFORxn. 
 
 " A striking presentation of the nascent religion, how best to realize the person.-U 
 and social ideal. " — Westminster Review, 
 63 The Agricultural Labourer. T. E. Kedbivw 
 
 "A short summary of his position, with appendices on wages, education, allov 
 ments, etc., etc." 
 64. Ferdinand Lassalle as a Social Reformer. E. Bernstein. 
 
 '• A worthy addition to the Social Science Series."— A'ort/i British Bconomitl.
 
 SOCIAL SCIENCE SERIES— {Continued}. 
 
 81. 
 82. 
 83. 
 84. 
 
 87. 
 83. 
 89. 
 90. 
 91. 
 92^ 
 93. 
 94. 
 
 England's Foreign Trade In XlXth Century. A. L. Bowlev,. 
 
 " FuU of valuable information, carefully compiled." — TimM. 
 Theory and Policy of Labour Protection. Dr. Schaffle. 
 
 " An attempt to systematize a conservative programme of reform."— ^/an. Guard.. 
 History of Rochdale Pioneers. G. J. Holioake. 
 
 " Brought down from 1844 to the Rochdale Congress of 1892."— Co-Op. A'tico. 
 Rights of Women. M. Osth.^oorski. 
 
 "An aiimirable storehouse of precedents, conveniently arran;;ed" — Z)ai7|/ Chron. 
 Dwellings of the People. Locke WoRTniNOToN. 
 
 "A valuable contribution to one of the most pressing prcblems of the Jay." — 
 Daily Chronicle. 
 Hours, Wages, and Production. Dr. Buentano. 
 
 "Characterised by all Pvotessor Brentano's clearness of style."— Economic Review. 
 Rise of Modern Democracy. Ch. Bokgeaud. 
 
 "A very useful little vnlume, characterised by exact research." — Daily Chronicle. 
 Land Systems of Australasia. Wjr. Epps. 
 
 " Exceedingly valualjle at the present time of depression and difficulty." — 
 Scots. Mag. 
 The Tyranny of Socialism. Y es Guvot. Pref. b}- J. H. Levy. 
 
 "M. Guyot is smart, lively, trenchant, and interesting."— X)«.iiv Chronicle. 
 Population and the Social System. Dr. Nith. 
 
 " A very valuable work of an Italian economist."— West. Rev. 
 The Labour Question. T. G. Spyeks. 
 
 " Will be found extremely useful."— Tir/KJ. 
 British Freewomsn, C. C. Stopes. 
 
 " The most complete study of the Women's Suffrage question." --£rt(7'i3'i Worn. Rev. 
 Suicide anb Insanity. Dr. J. K. Stbahan. 
 
 " An interestesting monograph dealing exhaustively with the subject."— TinK*. 
 A History of Tithes. Rev. H. W. Clarke. 
 
 " May be recommended to all who desire an accurate idea of the subject."— 0. Chron. 
 Three Months in a Workshop. P. Gohre, with Pref. by Prof. Ely. 
 
 " .A. vivid picture of the statt, tjf mind of German workmen."— .Uaric^. Guard. 
 Darwinism and Race Progress. Prof. J. B. Haycbaft. 
 
 "An interesting subject treated in an attractive fashion." — Glasgoic^erald. 
 Local Taxation and Finance. 
 Perils to British Trade. 
 The Social Contract. 
 Labour upon the Land. 
 Moral Pathology. 
 Parasitism, Organic and Soci-"' 
 Allotments and Small Holdings. 
 Money and its Relations to Pric? 
 Sober by Act of Parliament. 
 Workers on their Industries. 
 Revolution and Counter-RsYoIution. 
 Over-Productiou and Crises. 
 Local GoYcrnmant and State Aid. 
 Anglo-American Trade. 
 
 G. H. Blunden. 
 
 E. BuRois. 
 
 J J. PiuUfsEAU. Ec^ited by H. J. Tozer. 
 
 Ivdited by J. A. Hobson, M.A. 
 
 Arthur B. Giles, M.D., B.Sc. 
 
 Ma«;sart and Vanuervelde. 
 
 J. L. Green. 
 
 L. L. Price. 
 
 A. Mackenzu:. 
 
 F. W. Galton. 
 
 Karl Marx. 
 
 k. eodbertus. 
 
 S. J. Chapman. 
 
 S. J. Chapjlan. 
 
 F. 
 
 lES, 3S. 6d. 
 
 DOUBLE VOLUi 
 
 1. Life of Robert Owen. Lloyd Jones. 
 
 2. The Impossibility of Social Democracy: a Second Part of " The Quintessence 
 
 of Socialism ". Dr. A. Schaffle. 
 
 3. Condition of the Working Class in England in 1844. Fkedebick Engels. 
 
 4. The Principles of Social Economy. Yves Guy'OT. 
 
 5. Social Peace. G. von Schultze-Gae\'ernitz. 
 
 6. A Handbook of Socialism. W. D P. Bliss. 
 
 7. Socialism: its Growth and Outcome. W. Morris and E. B. Bax. 
 
 8. Economic Foundations of Society. A. Lokia. 
 
 SWAN 
 
 SONNENSCHEIN & CO., Lim., LONDON. 
 NEW YORK : CHARLES SCRIBNER'S SONS.
 
 3 1158 01272 1915 
 
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