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The Empire |!^t 
of Preference 



BY 

SENATOR PULSFORD 

OF AUSTRALIA 




Published by CASSELL AND COMPANY, LTD., 

La Belle Sauvage, Ludgate Hill, London, E.C., 

FOR THE 

COBDEN CLUB, Caxton House, Westminster, S.W. 
1910 



The Empire Aspect 
of Preference 



BY 

SENATOR PULSFORD 

Of Australia 




Published by GASSELL & COMPANY, LTD., 

La Belle Sauvage, Ludgate Hill, London, E.G., 

FOR THB 

COBDEN CLUB, Caxton House, Westminster, S.W. 
1910 



Pa 



(y^ 



The Empire Aspect of 
Preference 



Will the Preference sprat catch the British whale? 
This is an interesting question, but it is probable that 
very few people know how small, comparatively speak- 
ing, the sprat really is. Small as it is, however, it is 
yet in vogue with quite a number of people, though 
already it is associated with much failure. To give a 
brief review of its history, to record some of its failures, 
and to show some of its dangers, are the objects sought 
by the writer. The special cry of the Preferentialist is 
"The Empire." This brings at once to remembrance 
the fact that the Empire flag floats over populations 
aggregating four hundred millions and more; and it 
comes as something of a shock when it is found that 
the great majority of these are, as often as not, excluded 
from any share in a Preference effusively granted, and 
that, in fact, the "Empire Preference" is at times a 
penalty as between one part and other parts of the 

Empire 

The self-governing Colonies extend over vast areas of 
the most fertile and glorious regions of the world, and 
their ultimate possibilities of sustaining population have 
in the past led to dreams of impossibly rapid growth in 
this direction. At the Colonial Conference in Ottawa 



in 1894, the Hon. G. E. Foster, the Canadian Minister 
of Finance, in supporting Preference, said* : 

"Though the weight of the Empire, so far as 
population is concerned, is to-day in the islands, 
the Empire comprises outside territory which has a 
large population to-day, and which twenty-five years 
from now will have the largest proportion of the 
population of the British Empire." 
At a later period of the same Conference, Mr. Foster 
remarkedf : 

"In twenty years' time the larger part of Britain 
will be outside of Great Britain." 
Another Canadian, Mr. Colmer, wrotej : 

"It cannot be many years before the population 
of the Colonies will exceed that of the Mother 
Country, judging by the experience afforded in 
the United States." 
These quotations indicate the common tendency of lovers 
of Preference to speak as if the United Kingdom 
and the self-governing Colonies alone constituted "The 
Empire." The predictions that in twenty or twenty-five 
years from 1894, or in not many years from 1896, the 
self-governing Colonies would contain more people than 
the United Kingdom already look ridiculous, for, in- 
stead of being nearer the United Kingdom in the number 
of their population, they are actually further behind 
than they were. Since the census of 1891 the population 
of the United Kingdom has increased by a number ex- 
ceeding that of the entire population of to-day in either 
Australia or Canada. During the eighteen years since 
1891, spite of emigration, the population of the United 
Kingdom has increased about seven millions. But the 

* Proceedings Colonial Conference, 1894, Sessional Papers (5!}), Canada, p. 308. 

t Ibid, p. 234. 

X Statist Prize Essay, 1896, p. 4. 



whole of the self-governing Colonies have only increased, 
with immigration included, about four millions.* Whilst, 
therefore, the aggregate population of the whole of the 
self-governing Colonies in 1891 was twenty-nine millions 
less than that of the United Kingdom, to-day the 
aggregate is thirty-two millions less. Of the British 
subjects spread over the United Kingdom and the self- 
governing Colonies, three-quarters of the whole are in 
the United Kingdom, i If even it were right, instead of 
distinctly wrong, to ignore the vast populations of India 
and the Crown Colonies, the fact that only one in four 
of the white subjects of the Empire is in the self- 
governing Colonies might reasonably be expected to 
influence all minds. 

In another direction, and a significant one, events 
have signally falsified the predictions of the promoters 
of Preference. Spite of all the teachings of experience 
as to the failure of even heavy restrictive duties to effect 
their object, it has been unhesitatingly affirmed that 
Preference, even a small one, is capable of diverting 
large volumes of trade from one to another channel. 
I Sir Charles Tupper, of Canada, at the Congress of 
Chambers of Commerce held in London in 1892, pro- 
posed a resolution asking for "a slight differential duty," 
and afterwards added the words "not exceeding five per 
cent." In 1896 Mr. Colmer, in his Statist prize essay, 
suggested "small duties, equal to about three per cent." 
At the Ottawa Conference the Hon. Mr. Foster spoke 
of one per cent, being "probably quite sufficient" to 
handicap German trade. Take as another illustration 
the following quotation from a letter written in 1891 by 
the late Right Hon. Sir John Macdonald, Prime Minister 
of Canadaf : 

• White people only reckoned in South African figures, 
t Statist Prize Essay, p. 15. 



"She (Canada) will be quite ready to give British 
goods a Preference of five or even ten per cent, in 
our markets. . . . With such a differential scale 
of duties as I suggest, all manufactures that we 
do not make ourselves would be supplied by the 
Mother Country." 
It would be difficult to make a more emphatic asser- 
tion on the subject than this one made by Sir John 
Macdonald, and it would be equally as difficult to find 
a prediction on any subject that events had more com- 
pletely disproved. \^ Canada has given five and ten per 
cent., and even more. Preference to British goods for 
the past ten years, and yet the volume of manufactures 
imported into Canada from foreign countries has greatly 
increased. To-day believers in Preference do not find it 
to be the easy task they imagined it would be to support 
their policy by a simple reference to the trade returns. 
If the proof of the pudding is in the eating, then the 
Preferential pudding evidently does not come up to ex- 
pectations. Mrs. Partington was quite as much justified 
in thinking she could control the Atlantic with her broom 
as are politicians in thinking they can control vast 
volumes of commerce with taxes so trifling that they feel 
safe in saying the prices of the commodities taxed will 
not be raised. ^ 

, There is a marked change in the Preferential atmo- 
sphere in the United Kingdom in regard to the terms 
on which Colonial produce should be admitted to the 
markets of the United Kingdom. Canadian and other 
Colonial Preferentialists, with a blissful disregard alike 
of probabilities and of experience, asked the United 
Kingdom to become Protectionist as regards imports 
from foreign countries, and to remain Free Trade as 
regards imports from the self-governing Colonies.) In 
the name of "The Empire" this extraordinary com- 



binat'ion of opposite policies was accepted by certain 
politicians in the United Kingdom, but the inevitable 
has happened., Already many of those British politicians 
who began the descent of the Prqtectionist declivity, 
intending to stop midway, declare their intention of con- 
tinuing their journey till they reach the ditch at the 
bottom; in other words, they propose to tax imports 
from all the Colonies as well as those from foreign 
countries, though they would levy higher rates on the 
latter. One wrong step leads to another, and this change 
in the United Kingdom may be accepted as indicative 
of the certainty that, if the policy of restriction were 
once adopted, the first duties would be^only as the thin 
end of the wedge to those that would follow in the 
course of time. Colonial Preferentialists would then 
probably be found longing for a return of the days when 
the. world's greatest market was free to them, j 

^t is specially worthy of note that the growing efforts 
to force Preference on the United Kingdom have been 
simultaneous with the almost complete failure of the self- 
governing Colonies to arrange the system between them- 
selves. "^This is an important point, and it illuminates 
the wBole situation. That the self-governing Colonies 
have failed to arrange between themselves those schemes 
of Preference which they urge the Mother Country to 
arrange between herself and them must attract the atten- 
tion of the least observant. A policy which a man 
recommends to others, but hesitates to adopt in his own 
case, must be of doubtful value. It will be very profit- 
able to examine in some detail the history of Preference 
between the self-governing Colonies. (Yhe Ottawa Con- 
ference of 1894 was the first step of importance. In 
Canada and Australia for years before that date*)wishes 
had been expressed for power to permit of local Pre- 
fereritial ^ arrangements being made; but though the 



British Government passed an Act in 1873, giving tlie 
requisite powers, "nothing came of that legislation be- 
tween 1873 and 1895,"* than which fact nothing can 
more effectually show the hollowness of the whole busi- 
ness. Now as to the Ottawa Conference, its origin and 
its work. 

In 1893, which was a time of acute and widespread 
commercial distress, the Canadian Government despatched 
the Hon, Mackenzie Bowell, Minister for Trade and 
Customs, on a mission to Australia and New Zealand, 
"with a view to promote the extension of trade between 
Australasia and Canada," and nothing more, except to 
confer on the subject of a Pacific cable. On his return 
to Canada, Mr. Bowell made a report on his mission 
to the Governor-General, the Earl of Aberdeen. The 
report affirmed that "there can be no doubt" of "a large 
and profitable trade " springing up between the two 
countries, provided proper enterprise were shown. And, 
said Mr. Bowellf : 

"After consultation with the Premiers of New 
South Wales, Victoria, Queensland and South 
Australia respectively, it was deemed advisable that 
all the Colonies should send delegates to Canada 
for the purpose of a conference upon matters of 
joint interest. The two chief items were under- 
stood to be: (ist) Closer trade relations between 
Canada and the Australasian Colonies; and (2nd) 
the laying of a Pacific cable of an exclusively 
British character." 
The report also quoted from the speech of Lord Hope- 
toun, proroguing the Victorian Parliament shortly after 
he (Mr. Bowell) left Australia, in which the purpose of 
the visit was declared "to have been to establish trade 

* Statist Prize Essay, 1896, p. 11. 

t Mission to Australia, Sessional Papers (5A), 1894 — Canada. 



relations between Canada and Australia.'^ This mission 
was in 1893, ^"^ the conference which was proposed was 
held in 1894. The Canadian Government broadened the 
basis of the conference by including the Cape of Good 
Hope, Newfoundland, etc., in the list of invitations ; and 
at their wish the British Government was represented, 
the delegate being the Earl of Jersey. 

The conference opened in Ottawa on June 29th, 1894. 
In his opening address, the President (the Hon. Mac- 
kenzie Bowell) said* : 

"This conference is the direct outcome of the 

policy of the Canadian Government in its efforts 

to extend trade in every direction, more particularly 

with its sister Colonies.'' 

Whilst in Australia he had discussed the subject of 

more extended trade relations "between Canada and 

Australia by means of modifications of tariffs."! He 

also outlined a scheme to draw all the Colonies into a 

federation on a uniform Preferential basis. 

The Hon. G. E. Foster, the Canadian Minister of 
Finance, made several emphatic speeches. "We are," 
he said, "a Colonial conference; we are brought here 
to look after Colonial interests first." The delegates had, 
he said, come together from the distant parts of the 
earth, and the sympathy of not a single Canadian would 
be given to them unless they joined in arranging an 
extension of trade. He added : 

"Are not we here because we want to make 
arrangements with one another, and it seems to me 
that every resolution that we pass at this table, if 
it is to be of any consequence at all, must be 
followed by practical action." 
Before the conference ended the delegates informally 

• Ottawa Colonial Conference Record, p, 32, 
t Ibid, p. 24. 



discussed "the details of Colonial reciprocity," and the 
special commodities their respective Colonies could supply, 
in some cases producing samples. In this connection 
Mr. Foster said that "Canada ought to be given a 
first-rate position " in regard to agricultural implements 
in the other Colonies, and he expected they would be 
able to "add a very great deal to the trade" between 
Canada and Australia. In his closing speech the Pre- 
sident said : 

"My desire as a British subject is to see the 
Colonies trade among themselves, and with the 
Mother Country, if she will let uS. . . . There 
are scores of things in which we could trade profit- 
ably with each other." 
The words "if she will let us" were remarkably mal- 
apropos, seeing that the Mother Country alone of all the 
Empire and all the world stood wide open to Canadian 
exports; but these words were remarkably apropos of the 
whole trend of Preferential logic then and ever since. 

The conference passed resolutions to the effect that 
the Colonies should have power to make tariff arrange- 
ments with Great Britain or with one another ; that 
treaty engagements limiting the power of the self- 
governing Colonies were to be deprecated ; that Pre- 
ference between Great Britain and her Colonies was 
advisable; and then: "Further resolved: That until the 
Mother Country can see her way to enter into Customs 
arrangements with her Colonies, it is desirable that, when 
empowered to do so, the Colonies of Great Britain or 
such of them as may be disposed to accede to this view, 
take steps to place each other's products in whole or in 
part on a more favoured Customs basis than is accorded 
to the like products of foreign countries.". 

In his report to the British Government, Lord Jersey 
said : 



"It was clearly the opinion of all the Colonial 

delegates that it is desirable that the Colonies 

represented should make arrangements with one 

another, and, if possible, with Great Britain." 

His Lordship's report ended with lists of the commodities 

which had been suggested as suitable for inclusion in 

tariff arrangements between the Colonies. 

The conference closed with all-round expressions of 
kindliness, the delegates returned to their respective 
Colonies and promptly went to sleep. It does not 
seem too much to say that if Canada had not, three 
years later, passed her Tariff Act according Preference, 
in all probability nothing more would have been heard 
of Preferential arrangements between the self-governing 
Colonies. As it was, a further seven years passed before 
a single such agreement was made between any of the 
Colonies themselves. Since then other agreements be- 
tween Colonies have been concluded; but now, in this 
year 1909, fifteen years after the Ottawa Conference, the 
Preference actually existing between the self-governing 
Colonies can only be likened to a blighted harvest as 
compared with the abundant one predicted so confidently 
at the conference in 1894. To-day we have the cold fact 
that neither Canada nor Australia gives the slightest 
Preference the one to the other. The Preferences that 
exist between Colonies are in connection with South 
Africa and New Zealand; that is, with the smaller 
populations. 

The five self-governing Colonies aggregate between 
them rather over thirteen millions of people,* and of 
these nearly eleven millions are in Canada and Australia. 
The Preferential arrangements existing to-day between 
the Colonies do not, it is safe to say, cover more than 
one-fifth of the trade that would have been covered had 

* Excluding coloured people in South Africa. 



each of them given Preference to all the others. As a 
matter of fact, Australia was a reluctant participator in 
the Preferential resolutions of the Ottawa Conference, 
but Canada and Australia were the main factors of 
that conference, and to-day they are infinitely farther 
apart — so far as tariffs can separate — than they were 
in 1894. 

According to the last available returns* the aggregate 
imports of Canada, Australia, New Zealand, Newfound- 
land and South Africa from each other were ;^5,493,726, 
and of this aggregate only the insignificant total of 
;^38,i32, less than one per cent., was subject to Pre- 
ference. So that it is evident there is "much cry and 
little wool." Truly this is Preference reduced to an 
absurdity. South Africa makes a much better show, but 
her rates of Preference are so small — about three per 
cent., more or less — that they do little to influence 
imports. 

Mention has been made of the expectation of Canada 
that she would be given "a first-rate position " in Aus- 
tralia in regard to agricultural implements, in which, 
in 1894, she was already doing a fair trade, with little 
or no duties to meet. In 1906 an almost prohibitive duty 
was imposed by Australia, and the last word in this 
matter is that, in January of this year. Dr. Coulter, 

* The Statistician of the Commonwealth has supplied the following figures, which 
are exclusive of specie, and, as regards Canada and South Africa, are on goods 
entered for consumption, and in each case are from the latest statistics available in 
Australia at the time of writing. 

Aggregate imports into each self-governing Colony from the other four : — 



Total. 


Subject 


to Preference. 


Canada ;CS42,300 




^336 


Australia 1,602,122 


... 


7.93S 


New Zealand 2,584,903 




29.861 


Newfoundland 764,401 




— 


i^s. 493.726 




iTsS.rsa 


South Africa £3,107,567 


/: 


'.835.598 



'3 

Deputy Postmaster-General of Canada, who was in Aus- 
tralia at the time, accompanied by Mr. Larke, Trade 
Commissioner for Canada, had an interview with Mr. 
Tudor, the Australian Minister for Trade and Customs, 
to discuss yet again the subject of reciprocal trade. At 
this interview Mr. Tudor informed his visitors that 
Australia preferred to make her own machinery and did 
not require Canadian. Perhaps there is another word 
to say on this subject of agricultural implements. At 
the very time Australia, in 1906, raised the duty on 
harvesters, from an ad valorem duty equal to about ;^5 
each to the practically prohibitive specific duty of ;^I2, 
she passed the South African Preference Act, under which 
harvesters from South Africa may be admitted at a 
reduction instead of an advance on the lower of these 
rates; that is, about £4 from South Africa against ;^i2 
from Canada. The Preference given by Australia to 
South Africa in this article, and indeed in others also, 
is, in plain words, bogus. It would not have been 
granted except for the known fact that South Africa does 
not make harvesters. No Preferential reduction is made 
on this article even to the United Kingdom, which 
must pay the full ;^i2, or three times the rate agreed 
upon with South Africa. This is a novelty in Empire 
building. 

Whilst Preference between the Colonies has been a 
plant of slow growth, retaliation between them has not 
been entirely absent, as the following incident will show. 
New Zealand is a large exporter of timber, and when 
Australia arranged her first Federal tariff, certain duties 
were placed on undressed timber, and higher duties on 
dressed. New Zealand did not like this, and promptly 
responded by passing an Act levying an export duty on 
undressed timber. Australia and New Zealand, by import 
and export duties respectively, trying to wrest each from 



the other the work and profit attaching to the dressing 
of timber.* 

These lengthy references to the Ottawa Conference 
and to later developments are justified because they draw 
attention to a phase of Preference that is being lost 
sight of by the public. It will be seen that the agitation 
was started with the intention and the expectation of 
arranging a system of Preference between the self- 
governing Colonies, and that glowing predictions were 
made as to the results that were to follow therefrom. It 
is equally clear that the expectations have not been 
realised, and that "Failure" is written in large letters 
on the schemes for Preference between the self-governing 
Colonies. 

Having considered the position of Preference between 
the self-governing Colonies themselves, it is now time 
to consider the position with regard to the Preference 
given by them to the rest of the Empire; and bearing in 
mind the alleged cement-like qualities of Preference, it 
will be profitable to examine the various grants in detail. 
The Canadian Preference, dating from 1897, is marked 
by a broad-minded simplicity. The Preference given 
covers the whole range of dutiable commodities, f is 
liberal in amount, and extends to the products of both 
the white and the coloured subjects of the Empire, New- 
foundland and Australia excepted. The New Zealand 
Preference is limited to a rather small portion of the 
dutiable imports, but, like the Canadian, it extends to 
the products of both the white and coloured subjects of 
the King. The South African Preference is much less 

* One of the New Zealand Ministers, Mr. Walker, addressing the Legislative 
Council, said, " We say if you want our timber for butter boxes, you must allow us to 
saw it and pay our own men for the work." The bill, he said, was not a reprisal 
against the Commonwealth, it only meant that New Zealand must protect her owii 
industries. 

t Intoxicants and narcotics excepted. 



15 

in amount than the Canadian ; it covers, however, a 
large proportion of the imports subject to duty; but the 
products of India and the Crown Colonies are excluded 
from its benefits. The Australian Preference covers a 
selected, but fairly considerable, range of imports, is 
moderate in amount (more than the South African and 
less than the Canadian), but it is limited to the products 
of the United Kingdom ; the products of India and the 
Crown Colonies being excluded. Newfoundland gives 
no Preference. Canada created Preference by reducing 
existing duties on Empire imports ; Australia, New 
Zealand and South Africa created Preference by raising 
duties on imports from countries outside the area of 
Preference. The creation of Preference by raising duties 
in one direction, instead of reducing them in another, 
is a course that must be judged by the height of the 
rates dealt with, and by a comparison of the rates after 
the respective changes have been made. 

The Preferences were given in all cases with declara- 
tions that they were very valuable, and then Australia 
and South Africa excluded 330,000,000 out of 375,000,000 
people* from the area of preference. True, the many 
millions are poorer than the few millions, but that seems 
a reason for remembering, not for ignoring, them ; true, 
they are without political power, but this should ensure 
the safeguarding of their interests by those who have 
political power. 

That the whole scheme of Preference is bad is no 
defence for those who, asserting it to be good, legislate 
in connection with it, as Australia and South Africa have 
done. Leaving out of question the sincerity of those 
who pass such legislation whilst claiming that Preference 
is a most excellent Empire-cement, one can only wonder 
alike at their judgment and their logic. The open slight 

* 330,000,000 India and Crown Colonies, 45,000,000 United Kingdom. 



i6 

of the myriads of the coloured subjects of the Empire 
involved in this differential Preference is deeply to be 
regretted. To slight people with the view of attaching 
them to you seems likely to end in failure. To speak 
of these millions being "excluded" from a Preference 
is a weak way of presenting the matter. It is more 
correct to speak of their being penalised, and this by 
their fellow subjects, for they are called upon to submit 
to higher duties on goods shipped by themselves than 
those charged on similar goods shipped by some other 
parts of the Empire. Insult is added to injury when 
they are told that the system under which this penalisa- 
tion prevails is specially intended to build up the Empire. 
The introduction of the colour line into the tariff of any 
country flying the British flag is a matter of the utmost 
gravity, and all the more so when it is done in the name 
of "The Empire." In the Australian Act, giving Pre- 
ference to South Africa, the schedule reduces the amount 
of the Preference on sugar when it is "produced wholly 
or partly by black labour." Let it be remembered by all 
who love the Empire that this is a tariff development 
due entirely to Preference. It is an abuse of language 
to talk of legislation which differentiates between peoples 
of the same Empire as tending to cement them together. 

In many quarters there is a distinct tendency to (i) 
over-estimate the gain to the United Kingdom from 
Preference in the Colonies, (2) under-estimate the loss 
to the United Kingdom that would result from giving 
Preference to Empire products, and (3) under-estimate 
the value to the Colonies of the Free Trade policy of the 
United Kingdom. 

First, the over-estimate of the United Kingdom gain 
by Colonial Preference. Much time has been spent in 
trying to extract from statistics, especially those of Canada, 
evidence that the United Kingdom has greatly enlarged 



17 

its exports by reason of Preferential duties. There need 
be no hesitation at all, especially on the part of Free 
Traders, in recognising that trade is increased by reduc- 
tion of duty, more especially so in these days when com- 
petition runs high and business is done on small margins 
of profit. All other conditions being equal, a difference 
of 2>^ per cent., and even less, will often determine the 
destination of orders. But many other factors have to be 
considered. When a reduction is made in the duty on an 
article in which the United Kingdom already practically 
has a monopoly, the main result is a reduction of taxation 
in the importing country. The same result is arrived at 
when the reduction is on an article, like sugar, for instance, 
for which there is always a substantial world-price. 
It makes little or no difference to the world's trade 
in sugar that Canada imports from the British West 
Indies, instead of from Cuba or Europe : the balance left 
for the rest of the world is the same, and the world-value 
is unaffected. If the British West Indies did not sell their 
sugar to Canada, they would sell it to other countries, 
realising probably the same price. The reduction of duty 
gives Canada cheaper sugar, which, of course, is a good 
thing, though it is said Canadian refiners have at times 
retained the whole reduction for themselves, which is not 
a good thing. 

Then with regard to manufactured goods. People who 
have been in possession of a trade for a long time will 
fight against efforts to take it from them; they will try 
to economise in manufacture, possibly at the expense of 
the quality ; they will ask for lower freights ; they will 
cut their own profits, and so, often, succeed in meeting 
the extra five or ten per cent, levied against them. It is 
also to be remembered that there is a reflex action from 
Preference in the Colonies which affects British trade. 
Foreign countries take large quantities of Colonial pro- 



i8 

ducts, and have to pay for them. In the ordinary course 
of trade, in discharge of such liabilities, they ship large 
quantities of goods. If, however, the Colonial tariffs 
differentiate against foreign goods, and British are im- 
ported instead, then the foreign countries have moneys 
in hand which the shippers of the British goods require. 
This position influences the exchanges and facilitates the 
export of goods from foreign countries to the United 
Kingdom ; in short, so long as the Colonies are selling 
their produce to foreign countries, their legislation, which 
confers a benefit on the importation of British goods into 
the Colonies, at the same time acts as a bounty on the 
exportation of foreign goods to Great Britain. Obviously, 
therefore. Colonial Preference on British goods acts in 
more ways than one, and it is a question of the balance 
between gains and losses. 

Second : Under-estimate of the loss the United King- 
dom would sustain in giving Preference on imports from 
the rest of the Empire. The imports into the United 
Kingdom consist mainly of staple articles, which are ruled 
by world-prices. If wheat were subject to a duty of one, 
five or ten shillings per quarter from foreign countries 
above what was levied on Colonial, a protected market 
would be created extending over the whole Empire, and 
Colonial sellers would only dispose of their wheat at the 
world's value plus that duty, w-hatever it was. The wheat 
growers of the United Kingdom would exact the same 
advance. On wheat alone this would mean many millions 
of pounds to British taxpayers. There is no question that 
this is so. Colonial politicians know this, and use it as 
an argument to support Preference when speaking in their 
own Colonies. Thus, Sir William Lyne, speaking in 
Sydney in 1904, estimated that Australia would benefit to 
the extent of ;^7oo,ooo by increased prices of foodstuffs 
sold in the United Kingdom. "Nothing short of 10 per 



19 

cent, would prove of much practical value," said Sir 
William ; and that percentage was the basis of his calcu- 
lation. The aggregate of the enlarged payments to pro- 
ducers in the Colonies and in the United Kingdom would 
be considerable, even at a low range of duties, and a 
material addition to the cost of living, apart from the 
taxation levied on the imports from foreign countries. 

Third : Under-estimate of the value to the Colonies of 
the Free Trade policy of the United Kingdom. The in- 
ability of some people to recognise that Britain's Free 
Trade policy has been of superb advantage to the Colonies 
is really surprising. Never before in the history of the 
world have powers of self-government been given to 
Colonies as they have been by Great Britain, and it is 
worthy of note that the Free Trade era was simultaneous 
with the era of self-government. Free Trade is essentially 
a form of liberty; its spirit and its purpose mean liberty. 
If the old spirit of rigid Protection had not been cast 
out of Great Britain there would have been no self- 
governing powers granted to over-sea Colonies. How 
could there have been ? Are the facts of history forgotten ? 
When the Empire lay in the grip of Protection trade in 
the Colonies was curbed for the sake of the manufacturer, 
the shipowner and the capitalist of England. Lord 
Chatham, whose name stands high in British history, 
declared in Parliament that the British Colonies of North 
America had no right to manufacture even a nail for a 
horseshoe. It is a big, black chapter in British history 
that records how, in all sorts of directions, British Colonists 
— and the Irish people likewise — were prevented from 
trading when it was thought such trading might in- 
juriously affect anyone in England. A writer* lately 
referred to Philip of Spain, in 1564, having forbidden 
Spanish colonists to trade with foreigners; but even two 

• Mr, Bond in the British Empire Review, June, 1908, p. 217. 



centuries, and more, later than that, English legislation 
prohibited English Colonies from selling their produce to 
foreigners,* and Ireland was prohibited from shipping 
the product of her looms to any country whatever.! 
Whilst that sort of tyranny reigned supreme, self-govern- 
ment for the Colonies was an impossibility. 

It is said that "Preference is not a new movement," 
that "it was the historic policy of England." J Than this 
it would surely be impossible to frame a sentence more 
full of error; the little element of truth which it contains 
makes it all the more misleading. The first factor of 
that "historic policy" was, beyond the shadow of a ques- 
tion, rigid Protection against both foreign countries and 
British Colonies. In regard to the British Colonies, in 
some cases where it was absolutely certain no English 
interest or industry would be subjected to competition, 
reductions in duty were made. So far as wheat was con- 
cerned, the Preference was given under a sliding scale, 
and from time to time the duties were suspended, the 
Preference varied, and at times vanished; the interests of 
the British farmer ruled legislation all the time, except 
when fear of famine compelled a reluctant Parliament to 
suspend duties. § The Preference that the United King- 
dom is asked to give to-day does, in fact, represent "a new 
movement." The old position was one of enormous taxa- 
tion and restriction of trading rights, mitigated by some 
concessions to the Colonies : to-day it is asked that special 
advantages may be given to the Colonies, but that the 
enormous taxation and the restrictions that formerly 
accompanied Preference be not imposed. There is not 
much "historic policy" about that. 

• McCulloch " Commercial Dictionary," p. 349. 

+ Commercial Tariffs of the United Kingdom, presented to Parliament, 1898. 
X Tariff Commission's Colonial Preference and Imperial Reciprocity, June, 1908. 
^ The author, in his " Commerce and the Empire," pp. 58 and 59. gives a number 
of illustrations of the illusory character of this Preference on wheat. 



Having considered these three tendencies, it may be 
worth while, very briefly, looking at the progress made 
by Canada, in view of the fact that in that country, perhaps 
more than in any other part of the Empire where a re- 
strictive policy has been adopted, a belief is largely held 
that internal expansion results from external restriction — 
that the growth of Canada may be attributed to the Cana- 
dian tariff. Preference is now linked with that tariff, for 
which it is both an excuse and a bulwark. The policy of 
restriction, or Protection, as some prefer to call it, was 
adopted by Canada in 1879. How did population respond 
to this tariff policy? Census returns show that in the ten- 
year periods ending 1881, 1891 and 1901 the increases of 
population were 21, 12 and 11 per cent. The big increase 
was in the first period, when only two of the ten years 
enjoyed the exhilarating effect of the tariff, and with this 
first period the second and third, which were really under 
the tariff, compare very badly. Since 1901 there has been 
a marked increase, yet the highest estimate of the increase 
up to this year (1909) does not represent a greater per- 
centage increase than that of the pre-tariff period. So 
much for population. Prosperity of a very notable 
character has undoubtedly existed in Canada for some 
years up to quite recently, but this is clearly traceable to 
(i) the expansion of natural industries, resulting in an 
immense increase of exports, and (2) the importation of 
very large amounts of capital. During all this time the 
protected manufacturer in Canada has had nothing to do 
but sit tight, rake in the dollars, and, surveying the pro- 
sperity of the country, say "I did it." It is noteworthy 
that during the years of exuberant prosperity the imports 
of commodities into Canada reached a vast and unprece- 
dented flood, and that, as the flood lessened, so did the 
prosperity. The statistics of Australia and of New 
Zealand are full of evidence to the same effect. In all the 



Colonies the experience has been the same, big imports 
and good times have gone together. Even manufacturers 
in the Colonies have been able to employ more labour in 
times of large than in times of small imports. Anyone 
can see these facts for himself, and, if seeing and believing 
went together in all cases, restrictive tariffs would be in 
grave danger. Possibly there is a Protection microbe that 
affects the mental vision of its victims. 

The Protection-Preference system works out as follows : 
If ^100 of cotton or linen dresses be made and sold in 
Australia, the manufacturer will pay just ;^o os. od.* If 
;^ioo of British-made be sold in Australia, £3$, plus 10 
per cent. = ;^38 los. must be paid. If ;^ioo of foreign- 
made be sold, ;^4o, plus 10 per cent. = £^^ must be paid. 
Then the Australian manufacturer boasts of "how good 
we are to the dear Mother Country." As a matter of fact, 
"the dear Mother Country" is exceedingly useful to the 
Colonial manufacturer; skilfully dangled before a Colonial 
Parliament, extra Protection may be secured. 

It is a matter of real regret that in any Colony giving 
a Preference any feeling should exist that Great Britain 
was taking something for which she gave nothing. This 
is one of the real dangers attending Preference. At the 
Ottawa Conference in 1894 one of the Canadian Ministers, 
Mr. Foster, said : 

" I say, as far as I am concerned — and I think as 
far as Canada is concerned — the day will be consider- 
ably distant when we will propose, if it is not to our 
advantage somewhat, to give very great commercial 
advantages to the British Empire without receiving 
something in return." 
Yet three years later, under the guidance of another 
Ministry, Canada, unasked and without any return, gave 

* If he used foreign instead of British goods he would pay 5% on the cost of such 
materiaL The Protection shown in this illustration is happily above the average. 



23 

a very substantial tariff Preference. This Preference has 
been continued to the present, and at the Colonial Con- 
ference of 1907 the Prime Minister of Canada, Sir Wilfrid 
Laurier, in spite of much pressure to take up a contrary 
attitude, would not press for something in return. The 
Empire owes much to the dignified reticence of Sir Wilfrid. 
It is clear, however, that a number, perhaps a consider- 
able number, of people in Canada think that their policy 
of Preference is of very great value to British trade, and 
thinking so, they very naturally hold views similar to 
those expressed by Mr. Foster in 1894 to the effect that a 
Preference given by a Colony calls for a return Preference 
from the Mother Country. It is, therefore, of the highest 
importance that sound views should be held of the value, 
influence and consequences of Preference. Very numerous 
instances could be mentioned of Colonial politicians who 
have strongly insisted that it was the duty of Great Britain 
to give Preference to her Colonies, and it is probably 
because of this insistence that the Tariff Reform party in 
England have presumed to speak of "the Colonial 
demand."* 

The love and devotion of the people of the self-govern- 
ing Colonies — the sister nations — to the King and Empire 
are quite as intense as are those of the people who live 
in the heart of the Empire, and herein lies a great danger. 
Patriotism is often used as a cover for schemes of the 
most extreme selfishness, and when national feeling has 
been worked up to a white heat, steps may be taken, legis- 
lation may be enacted, without that cool judgment and 

* The words quoted appeared in the Monthly Notes on Tariff Reform oi ]vlt\&, 1907. 
Another rash statement appeared in the Tariff Commission report on ' ' Colonial Pre- 
ference and Imperial Reciprocity," July, 1908. It was affirmed that at the 1902 
Conference " The Colonial Ministers undertook to grant further preferences to the 
United Kingdom "—notwithstanding the well-known fact that a tariff preference by a 
self-governing Colony can only be granted by the Parliament of that Colony, and not 
one of them had authorised the Ministers to make such a promise. 



24 

calm inquiry ordinarily given. The people of the United 
Kingdom are becoming increasingly alive to the wealth 
of love and devotion that exists in the young sister nations, 
and this tends to take the edge off their criticism of unwise 
proposals. To use Empire sentiment in any part of the 
Empire for party gain ought to be judged a great offence, 
but to use it with a view to secure money gain for private 
industry is a still greater offence. Sentiment is the life- 
blood of a nation : it must be kept pure; and no greater 
mistake can be made than for public men to withhold 
criticism that may tend to keep it from deteriorating. 

It does not seem to be recognised yet that consumers 
of food throughout the Empire, outside the United King- 
dom, owe a debt of gratitude to the people of the United 
Kingdom for refusing to take up the scheme of Prefer- 
ence. A tax on bread stuffs in the United Kingdom, on 
a Preference basis, would not only raise the cost in the 
United Kingdom, but also correspondingly throughout 
the Empire ; dearer bread in England means also dearer 
bread in Canada. This is only one illustration of many 
that could be given showing that the people of the United 
Kingdom have not been taking up a selfish position in 
this matter, but have really been fighting for the welfare 
of the people of the whole Empire. 

Again and again, with justifiable pride, Canadians, 
Australians and other Colonists point to their boundless 
acres and their vast possibilities of production, and appar- 
ently they don't see that in so doing they destroy the main 
argument for Preference. The truth is that the Empire 
is much, very much, too big for tariff barriers against the 
rest of the world. 'The self-governing and other Colonies, 
as well as India, must trade with foreign countries, for ^ 
they need the consuming powers of their vast populations. 
Those who believe most in the expansion of Canada, 
Australia, India, etc., etc., are the people, above all others. 



who ought to see that the consuming powers of the United 
Kingdom are limited by the extent of its population, and 
that these are destined to be overtaken in one commodity 
after another, even as they are already overtaken in several 
commodities. Wool is a conspicuous example. Australia 
alone is producing more wool than the whole British 
Empire consumes, and yet New Zealand and South Africa 
also have large supplies. In bygone years, of the aggre- 
gate exports of the Empire, manufactured goods shipped 
by the Mother Country have been the great feature; but 
the time is gradually coming when, of the Empire's aggre- 
gate exports, by far the greatest feature will be the products 
of the Empire outside the Mother Country. In truth, 
therefore, Preference cannot be associated with the biggest 
and most human outlook of a wonderful Empire. The 
real "little Englanders " are those whose vision does not 
extend beyond the Empire. 

It is clear that Preference does not improve on 
acquaintance. True, it has been boomed in Great Britain 
i by Colonial statesmen, but it is also true that they in 
their own Protectionist Colonies have, more often than 
not, failed to agree; the policy did not stand the test 
of efforts at bargaining between Protectionists. When 
it was a question of giving a Preference to Free Tradif 
England without bargaining, it was easy sailing, for a 
concession could be balanced, and a little more than 
balanced, by an increase of the sum from which the 
concession was to be deducted. This is what the Times 
aptly described as "derisory Preference"*; or, as in the 
case of Canada, where a generous and all-round Pre- 
ference was given, the Preferences can be reduced in the 
interest of local industry when required, which has been 
done in that of woollens. The mind's eye can see a 
lurid picture of what might occur if Great Britain, 

• Referring to the new Australian tariff. August, 1907. 



26 

swallowing the Preference sprat, became Protectionist, 
and then attempted to bargain with her Protectionist 
Colonies, 

In this article, so far, the subject has been considered 
from its purely business or financial aspect. There are, 
however, far greater and more momentous objections to 
the whole scheme of Preference than any yet advanced. 
These objections are bound up in the history of the 
Empire : its position to-day, its prospects for to-morrow, 
and its relations with the rest of the world. 

The enormous territories over which the flag of the 
Motherland floats to-day were mainly acquired when 
they were not much wanted, certainly not much needed, 
by other nations; and, indeed, it cannot be said that 
they were either greatly wanted or needed by Great 
Britain herself. When they were thus acquired there 
was not one nation in Europe that really needed any 
outlet for population, nor was there any country whose 
own food supply was insufficient. Naturally, Great 
Britain, with her small area, was the iirst European 
country to feel the pressure both in the direction of too 
many people and too little food. So far, however, as 
the food supply was concerned. Great Britain easily 
.obtained from the Continent of Europe the extra supplies 
she required. But rapid changes, growth unparalleled, 
marked the nineteenth century, which, beginning with 
an aggregate European population of 175 millions, closed 
with one of 400 millions, whilst in the interval the out- 
flow to distant lands with its own natural increase reached 
another 100 millions. The world position; the relation 
between countries and between continents; the need, one 
nation of another, in regard to both room and food, have 
all undergone developments that are simply stupendous; 
developments that even yet it is probable few statesmen 
either fully understand or appreciate; developments that 



to-day are still unfolding and which during the twentieth 
century must create further momentous changes. 

When Great Britain took possession of millions and 
millions of square miles of new countries the world 
generally was not greatly interested in the matter, and 
certainly attached no importance in this connection to 
the fiscal policy under which the Empire was governed. 
But gradually as the last century advanced the sleepy 
world rubbed its eyes and woke up. Gold was found 
in vast quantities; goods were carried by steam on sea 
and on land; messages were carried by electricity the 
wide world over; science won victories in all directions; 
under various influences population increased as it had 
never increased before; emigration on a scale unknown 
to history developed; north and south, east and west, 
the nations came closer together, for distance ceased to 
count as it had done; and the Empire — our Empire — 
opening its lungs to the winds of heaven, "hitched" its 
"wagon " to the star of Free Trade. 

The Empire position was unique and inspiring. Very 
little consideration will show that freedom, as the govern- 
ing principle in trade, was called for; that it eminently 
fitted the times, the people, and the position of world 
politics. It was natural that the race whose sons had 
won for the Empire so much of the world's vacant spaces 
should be the one to first make this great advance in 
human freedom, and it was assuredly due to the world 
that the Power which had possessed itself of all these 
lands should maintain its possession in no dog-in-the- 
manger spirit. The historian of the future, when he 
calmly records the events of the nineteenth century, will 
probably say that the inauguration of Free Trade not 
only did much to build up the British Empire, but was, 
almost beyond words, instrumental in reducing the 
natural jealousy felt by other Powers consequent upon 



38 

the monopoly of new lands which Great Britain had 
established, and that it was accepted as reasonable for 
the supremacy of the seas to be in the hands that main- 
tained the freedom of commerce. 

, But the unexpected happened : the Mother Country 
/gave self-government to one Colony after another, and 
' the result was that first one and then another of them 
departed from the simple path of Free Trade and built 
up a tariff against the world, the Mother Country in- 
cluded. There was little room for complaint on the part 
of foreign countries so long as they and the Mother 
Country were equal sufferers. Yet undoubtedly every 
such tariff did something to weaken the strength and to 
lessen the nobility of the Empire position. But again 
the position changed, and again for the worse. The 
Colonies, or some of them, added to their system of 
Protection the system of differentiation against foreign 
countries : a Protection-penalty system ; Protection ■plus 
penalty against foreign countries ; Protection minus 
penalty against the Motherland. 

It would be difficult to exaggerate the far-reaching 
importance of the principle involved. It was not long 
before a tariff war began between Canada and Germany, 
a contest which has now lasted for some years. This 
is very lamentable. It is difficult to see the difference 
between a tariff war with the Empire or one with part 
of the Empire, for the ultimate political responsibility 
is certainly that of the Empire. Few will be found 
willing to contend that any benefit to British trade in 
Canada consequent on Preference can outweigh the 
seriousness of a strain on the relations of Great Britain 
with a great European Power. It is needful very clearly 
to keep in view a special, perhaps the special, con- 
dition that marks the British Empire, differentiating it 
from any other that exists to-day. The countries under 



29 

its sway are equal in area to several Europes : that is a 
big fact. There is no area in the world equal to a substan- 
tial part of even one of our Colonies available to-day for 
colonisation by any other European Power; and that is 
a big fact. Whether the policy of Protection be finan- 
cially sound or unsound, it is, at any rate, a fruitful 
cause of strife between nations, and evidently that danger 
of strife is multiplied when Protection is capable of being 
brought into play by any one head of a many-headed 
Empire. If that policy were generally adopted through- 
out the Empire, as well as being, as it is, entrenched 
in front of vast areas of lands as yet but little developed, 
the high-water mark of danger would surely be reached. 
Under the influence of the ignorance and prejudice which 
centre in the policy of restriction — Protection, if you will 
— a silly surprise is expressed that the commerce of 
nations, long backward, is at last expanding, when joy 
might be looked for, that prosperity is increasing in the 
family of nations. 

"Political economy," says Ruskin, "... is impos- 
sible except under certain conditions of moral culture."* 
The present is a time to test the moral culture of the 
Mother Country. Though Preference is but a sprat in 
the balance of debits and credits of mere trading, it has 
in it a quality, a venom, that might easily lead to the 
gravest danger to the existence of the Empire. 

Wealth has its responsibilities : our Empire is 
dowered beyond all others with fertile lands and latent 
riches; therefore a trading policy more generous than 
that of any other nation is due to the world. It has 
been given to the world, and cannot now be withdrawn 
and the skinflint policy of Protection substituted, how- 
ever diluted at the first, without courting more wide- 
spread antagonism than is aroused by the same policy 

• " Munera Pulveris." 



30 

followed by any other nation. In art, science, manu- 
facture, and, in fact, in everything that makes for human 
happiness, advancement to-day exceeds anything ever 
recorded in history. Never, therefore, was liberty so 
needed, so invaluable to civilisation and humanity, never 
was she so precious ; to weaken in her defence would be 
a crime; to uphold her and to glory in her is to-day the 
proud privilege and the pressing duty of the United 

Kingdom. 

Edward Pulsford. 
Sydney, May, 1909. 

P.S. — Sydney, May, 1910. — Twelve months have 
passed since this paper was written, but through various 
causes — chiefly arising from the distance of Australia from 
England — its publication has been delayed. The twelve 
months have, however, only added force to the arguments 
brought forward; for not the slightest progress has been 
made in the interval in preferential arrangements between 
the Dominions themselves — the originators and supporters 
of Preference. On the other hand, Empire controversies 
have been increased in connection with the preferential, 
or differential tariffs, notably that of Canada. The fact 
that the policy called " Preference " breeds controversy 
and leads to disunion rather than to union is daily be- 
coming clearer. E. P. 



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