FISCAL POLICY OF THE COUNTRY.

HC Deb 28 May 1903 vol 123 cc141-98

*SIR CHARLES DILKE (Gloucestershire, Forest of Dean)

It is, I think, impossible for the House to adjourn for the recess without some consideration of the topics which have recently been introduced as electoral topics for the consideration of the country on behalf of the Administration. They constitute a change in our fiscal policy, and indeed in the whole policy of this country, which is revolutionary and opposed to all the traditions and opinions of the overwhelming majority of this House, including, I believe, a majority of hon. Gentlemen opposite. That, surely, is a matter for the consideration of the House which ought not to be delayed. Many hon. Members would have taken an even earlier opportunity of bringing these topics to the attention of the House had it not been known that this opportunity would occur to-day. But that the House should wait until the discussion of the Finance Bill, which might not provide so good an opportunity for eliciting the exact position in which we stand, seems to me to be impossible under the circumstances. The declarations to which I allude are contained notably in three different speeches. I may have to mention speeches by the First Lord of the Treasury and the President of the Local Government Board; but the speeches to which I wish particularly to direct the attention of the House are a speech on the 15th inst., a very few important words in a speech delivered in this House on Friday, and a speech on Saturday by the Parliamentary Secretary to the Board of Trade. These three speeches form a series. I believe hon. Members who have watched the speeches of the Colonial Secretary for years did not think that the first of these speeches carried matters much farther than he carried them some years ago. Yet, that speech, read in the light of the subsequent speech of the right hon. Gentleman in this House, and the direct statement of the Secretary to the Board of Trade, receives a momentous importance, an electoral bearing, a bearing on the policy of the Government as a whole, which forces it on the attention of the House. In the second speech of the Colonial Secretary in this House, he dotted the i's of his first speech, because he stated that the enormous sum of money required for old-age pensions could not be supplied except by one means, and that means was a duty on the foreign imports of this country. I think the right hon. Gentleman will not deny that he pointed to a duty on food and raw materials. I cannot for the life of me see how, unless a duty is laid on food and raw materials, he can find from our foreign imports the amount of money he requires.

THE SECRETARY OF STATE FOR THE COLONIES (Mr. J. CHAMBERLAIN,) Birmingham, W.

I shall have to explain at some length to the House. All I ask the right hon. Baronet for the moment is not to quote me as committed to this, that, or any other proposition. Perhaps, I have not made myself clear. I have not the slightest objection to the right hon. Baronet quoting to any extent he likes; but he must not appeal to me to agree with his quotations.

*SIR CHARLES DILKE

The main words of the right hon. Gentleman's speech in the House were that the vast sum of money required for old-age pensions was to be provided by a review of our fiscal system. My contention—which I will not father on the right hon. Gentleman—is that it is impossible to find that amount of money without imposing a duty on food and raw materials. Almost all the imports of this country consist of food and raw materials, or half manufactured materials, which, although they come in as manufactured goods, are in fact raw material. I need only allude to the boot and shoe trade, which lives on leather manufactured abroad, but which in fact is raw material. That the Colonial Secretary was thinking of some system of the kind is shown by his words in another speech, and in a letter in which he said that, in his belief, the working classes would submit to a considerable increase in the cost of living provided they got increased wages. Surely, that pointed to a duty on food and raw materials, not to a duty on luxuries. The speech of the Secretary to the Board of Trade took these speeches entirely out of the category of personal utterances or speeches only suggesting a policy for the distant future. The Secretary to the Board of Trade stated, as though by authority, that these speeches were concerted by the Government. The matter is one of first-class importance; and if the result of this debate is to prove that the impression which I have stated was incorrect, the debate will not be without good result. What the Secretary to the Board of Trade said was that the speakers struck the same note; that they struck it in complete harmony; and that he might say, what was the actual fact, that the policy expressed in these speeches was the policy which was arranged between the Statesmen who uttered it. I leave the House to draw its own conclusions. No doubt the Government will speak through authorised exponents of their views in this debate. These words were very clear, and very strong; and the importance which the first speech of the Colonial Secretary has assumed, rests on a belief, formed in our minds, and supported by all ordinary sources of information, which has not astonished us more than it has astonished a large number of hon. Gentlemen opposite.

The hon. Members who have spoken on this subject and who have adopted the policy of the Colonial Secretary do not, I think, include the right hon. Gentleman the Chancellor of the Exchequer. I heard with deep concern that the Chancellor of the Exchequer had been called away to Aberdeen, where I know he had a very pressing engagement, but I see he has not kept it. I am very glad the right hon. Gentleman is here, because, when the Secretary of the Board of Trade, in the regrettable illness of the President of the Board of Trade, speaks as he did at Chester, it is clear that we ought to ascertain, as early as possible, whether he speaks with the authority of the Financial Department of the Government which is specially concerned, if not with the authority of the Government as a whole. This matter is not one in which it is possible for any individual Minister to assume the assent of his colleagues in so startling a change of policy as this of the Colonial Secretary, unless it has been before the Cabinet as a whole, but to judge from the words used by the right hon. Gentleman the Chancellor of the Exchequer when he proposed the repeal of the corn tax, the feeling in the Cabinet falls altogether short of the thorough agreement which has been alluded to on the policy which has now been revealed. The Government were parties to certain early stages of this policy. The Cabinet was a party to the Colonial Conferences of 1897 and 1902. The policy of those Conferences ought to have been discussed by this House, but it never was properly discussed, and one reason for raising this matter now is the very fact that this policy has not been discussed heretofore. That policy as a whole is a dangerous policy; it was entering into a career which might or might not lead to the difficulties in which we now find ourselves. The basis of those Conferences was virtually the same. Those Conferences were called to consider defence contribution from the colonies, and after that the preference to be given by the colonies to the mother country. There was nothing about preference by us, and there is a very great distinction between the two things. I will not dwell upon it. I will merely state it in the words used by Professor Davidson of the University of New Brunswick, in his book, which is the best ever written on the subject. He is a Canadian advocate of preferential duties, but in his book he distinctly states that it is not possible for us to adopt preferential duties, that the disturbance in our trade will be so vast and overwhelming that the colonies must not expect that we should follow them. He also points out—and this is material—that it is easy for a protectionist colony to give preferential duties by raising the protectionist duties against the world and then lowering them again as against the mother country. The Conference, from the contribution point of view, was a fiasco; it did not produce the contribution which had been expected. Putting aside what has been alleged, that Australia has increased her naval contribution, and it must be borne in mind that that increase will be very small under the new conditions, which are the old conditions with worse new ones attached, the Conference of 1902, from the point of view of the defence contribution, was a fiasco, but the Conference of 1897 did produce the adoption by Canada of preferential duties in our favour. What was the statement of the right hon. Gentleman who seemed willing, as perhaps the Government were also willing, to give up our principles without obtaining a contribution, as to the effect of these preferential duties? In the report of the Colonial Conference he said the rate of increase under the preferential tariff was actually less than under the general tariff and under the free tariff. That was a pretty admission. The Secretary to the Board of Trade, who is the professional economist of the Government, and who is always turned on to give a sort of economic gloss to their heresies, knows that this is their weak point, and he tackled it courageously in the speech at Chester. The hon. Gentleman, who is a Canadian protectionist, used these words. He said— He had carefully examined the figures, and he was well within the mark in saying that we did at least 20 per cent. more trade with Canada now than we would have done if that preference had not been granted. That conflicts very strongly with the words of the Secretary of State. The Secretary of State gave the case away but the Under Secretary of State defended it. Now, it will be observed that the hon. Gentleman used a hypothesis in defending this policy. Indeed, he used the very language, and probably the figures too, of the Canadian Memorandum, which did not prevail with the Department which he represents. The Board of Trade Memorandum, on the other hand, stated that the comparison failed to show any marked effect of the preferential tariff in stimulating trade between the British Empire and the Dominion. I much regret the absence of the President of the Board of Trade, but I do think in the absence of the right hon. Gentleman we ought to have some statement from the Chancellor of the Exchequer, or some member of the Ministry, as to what is the Board of Trade's present view of the subject, and whether we are justified in assuming that they adhere to the Memorandum which they laid before the Colonial Conference.

Now let us look at the policy which is to be placed before the people on the dissolution. The policy now proposed by the Secretary for the Colonies appears to be to raise a large income from duties on foreign imports, which in order to be large must include duties on food and raw materials. The Secretary to the Board of Trade does not admit that; he cautiously stated at Chester that there were difficulties about food and raw materials. I should certainly think there were, but surely it is time, when this policy is to be acclaimed from half the platforms in the country, that we should know where we stand on the question whether the millions which are to be claimed for the purpose of old-age pensions are to be got out of duties upon food. The hon. Member the Secretary to the Board of Trade is Member for Glasgow, and I feel for him. No doubt he does not want to offend powerful colleagues by one declaration or his constituents by the other, and he cannot be taken to mean anything further than his words suggest, and with regard to raw material he tried to meet the difficulty by suggesting a tax with the adoption of the principle of rebates. That would be a pretty job for this country with our gigantic industries, using raw materials part of which are foreign and part colonial. How the rebate is to be allowed I cannot conceive, but if we are to be drawn into this policy this question must be asked at once. I remember a despatch once laid before this House by a distinguished Secretary of State which related a conversation between himself and the French Ambassador on the question of free trade. The French Ambassador got very angry because he was looked upon as a protectionist, and declared that he was a life-long free-trader. "Yes, I know," said the Secretary of State, "but I have never for the life of me been able to understand the difference between a French free-trader and a British protectionist." The House can apply that resemblance here. Right hon. gentlemen think they are free-traders, but there are tests with regard to free trade, and they do not come up to those tests. The Parliamentary Secretary to the Board of Trade shook his head on being accused of being a protectionist, and used these words: Alluding to the Secretary of State for the Colonies he said the right hon. Gentleman was a free-trader; then he said he— Also believed in free trade, or at least he thought he believed in it.

MR. BONAR LAW

It depends on the definition of free trade.

*SIR CHARLES DILKE

No doubt. The hon. Gentleman went on to give not a definition but an explanation, and this is the explanation. "He wished them to remember that in the early days of the last century our commercial supremacy was infinitely greater than it ever had been since." The hon. Gentleman evidently regretted the good old times. That was in the days "when free trade had not been thought of." I confess it had never previously entered my head that anyone could regret "the early times of the last century." The hon. Member could not mean that he regretted the days of the Great War, and therefore he must refer to the period between 1819 and 1831.

MR. BONAR LAW

At the beginning of the century.

*SIR CHARLES DILKE

He regrets the Great War! I do not know whether the old country party opposition would go so far as to regret the absence of the prices which obtained during the Great War. You have to take into consideration the causes by which those prices were produced. It never entered my mind that people would regret the early part of that century, when even the loyalty of the working classes, which in all periods of trial in English history has been so extraordinary, was shaken to the point of rick-burning, bread riots, and other horrors.

MR. JAMES LOWTHER (Kent, Thanet)

There were no duties, except a very nominal tax, on any breadstuffs at all.

*SIR CHARLES DILKE

In any case, the war did the duty of a tax in keeping goods out. But it is not my argument; it is the argument of the Secretary to the Board of Trade; he regrets those days.

MR. BONAR LAW

I must really interrupt the right hon. Baronet. He says I regret the particular set of circumstances which obtained at the beginning of the last century. What I did say was an undoubted historical fact, that our trade supremacy was greater then than it has been ever since free trade was adopted.

*SIR CHARLES DILKE

But circumstances which had nothing to do with his argument at the moment require consideration. It was a time when our ships had swept the sea, and the one neutral power in the world had been so bullied by us that she was obliged to go to war with us. But this is a test of free trade, and I should like to ask any defender of this policy whether that test is here possible or not. When dealing with cotton duties in India and Egypt we have insisted that there should be an excise exactly corresponding to the duties imposed. We have not heard a word about that in this case. Unless that policy is applied, pure protection must be the result of the duties. We ought to know at once where we stand on this subject. We are told there is concurrence amongst the leading members of the Government in the statements which have been made pointing to large duties on foreign imports, but those statements are hardly consistent with the action of the Government—and actions speak louder than words—in repealing the Corn Tax. The Corn Tax was repealed by the Chancellor of the Exchequer in language which was guarded, no doubt, and intended to cover the views of two sets of colleagues who perhaps did not agree among themselves, but which nevertheless was free trade and not protectionist. The Chancellor of the Exchequer is the guardian of the great commercial interests of the country; he is regarded as a safe man. It is true he has a "past" concerning a certain heresy on this subject, but I am glad to welcome him as a convert of many years standing. The late Archbishop of Canterbury began by being suspected of heresy, and the whole of his clergy rose in arms against him on his elevation to the Episcopate, but he ended by being a pillar of orthodoxy in the Church. And so with the Chancellor of the Exchequer. We take him joyfully to our arms, and, as he is regarded in Threadneedle Street as a safe man, let him give us safety here. I do not wish to hold the First Lord too closely to what was perhaps an innocent slip when he spoke of the Corn Duty as a bread tax.

MR. A. J. BALFOUR

It was a slip.

SIR CHARLES DILKE

It was a slip? We maintain that it is a bread tax, and if this is a well considered policy, wild though we think it, it is a policy which rests essentially upon the taxation of food and raw materials.

The speech of the Secretary of State, in the light of subsequent utterances, must be regarded as the foundation of this policy, and its arguments are well worth consideration in this House. The right hon. Gentleman began, of course, by abusing the Manchester School. He said the Manchester School was dead, but he went on to say that if Cobden had been alive he would have been found on his platform. I venture to think that had Cobden been in favour of this policy it would have been only because he had lived to an excessive age and softening of the brain had set in. The right hon. Gentleman went on to attack the "dangerous policy of Home Rule," which has some connection with this subject, but not much. It reminds us of the fact that all the great white colonies of which the right hon. Gentleman was speaking are in favour of Home Rule. So that in advocating federal union with these white colonies, the right hon. Gentleman is in this curious position: he is in favour of federal union and against Home Rule, while the white colonies are in favour of Home Rule, and Australia is entirely opposed to the policy of federal union. The Colonial Secretary declared that the whole of this policy was new, and that it had to be taken up suddenly because there had arisen a condition of affairs entirely different from anything which had ever before existed in the history of the British Empire. His words were— This idea of common responsibility is altogether a new one. That is an amazing statement to come from anyone learned in the history of our colonies, especially from the Statesman at the head of the Colonial Office. The doctrine of common responsibility between ourselves and our colonies was fully recognised in the foundation of all the great colonies. It was expressly recognised in the time of Cromwell, when a proportionately larger force of colonial militia followed the British flag in foreign wars than even in the late war. It was recognised by Washington, and at the time of the siege of Louisburg,—indeed, throughout the 18th century, and it was only brought to an end, as far as the American colonies were concerned, by the tactless and rash haste with which we interfered with the fabric that had slowly been built up. The Colonial Secretary said the Empire itself is new. Why, the doctrine of the Imperial character of the British Crown is as old as the Monarchy! It has been asserted over and over again in the laws of the country; it had to do with the Reformation, and it was expressly recognised throughout Tudor times. That statement of the right hon. Gentleman led up to an astounding omission from the speech, upon which I comment because it is an omission from the entire policy which robs it of all claim to be considered as a truly Imperial policy. The Colonial Secretary said— I am not going to speak to-night of those hundreds of millions of our Indian and native fellow subjects. In the British Empire and her protectorates there are 400,000,000 people, 300,000,000 of whom are in India, but the Colonial Secretary said he would deal only with the "10,000,000 of our white fellow subjects in the self-governing colonies," who, with the 40,000,000 here, make 50,000,000 out of 400,000,000. The remaining 350,000,000 he shut out not only of his speech, which would not have been of much importance, but of the whole policy which is now being developed as regards the trade, finance, and future of the Empire. In the whole of that speech there was not the vestige of a suggestion as to how the enormous Indian problem is to be faced. If the right hon. Gentleman, instead of being Colonial Secretary for so long, had had a term of office as Secretary of State for India, and had approached this question from that side, I am sure he would have looked at it in a different way, and he would have tried to shape his policy to meet the difficulties of the case. When dealing with the fiscal policy of this country there ought always to be present to our minds the fact that India pays her share of the cost of running the Empire, while others do not. You have only to contrast what is paid per head in Ceylon with what is paid per head in Southern India to see that that is so. India has every claim to consideration, and our responsibility towards her is greater than to the self-governing colonies. The Colonial Secretary said that if this matter had been taken in time— We might have laid the foundations of an Imperial edifice. Franklin tried it, and why did his plan of federal union fail? In a letter in 1767, Franklin said it was because the colonies were indifferent, but the real fact was that New England was opposed to it, as Australia is opposed to it now. It is dangerous in the highest degree to attempt to force federal union on the colonies as long as you have the notorious fact before you that Australia is opposed to any such system There was a debate on this subject on 3rd April, 1900, when the Colonial Secretary said that we should make no suggestions of our own upon a subject so extraordinarily delicate and dangerous. We must wait for suggestions from the colonies.

He was against all rash dealings with the question, but now he says it must be taken up at once. In the speech of the 15th he said— Unless trade is dealt with … I do not believe in a continued union. But there is a link of Empire which was not mentioned in that speech. Federal union is put out of the question by the opposition of Australia, but the link to which I refer is strong in Australia. If that link is all that is required by the colonies you may very well leave well alone in that respect. The right hon. Gentleman says we ought to tempt the colonies into federal union by a trade preference. That is not a new policy. Trade preference has been tried before. Some of us still remember the last examples of trade preference. Trade preference was a gross, gigantic, and admitted failure. I would refer hon. Members to what Adam Smith says on the doctrine of trade preference, and the reason it was swept away by an indignant country. The Colonial Secretary believes that Australia is coming into line with Canada in this matter, and he said— Australia has accepted the principle …. and pledged themselves to recommend a substantial preference in favour of the goods of the Mother country. That is an exaggeration. What the representatives of Australia pledged themselves to was a general resolution in favour of a preference "not yet defined as to nature or extent." Yesterday the Commonwealth Parliament was opened by Lord Tennyson, and he declared, in the name of the Commonwealth Ministry, that while they had agreed to these general words they were not in a position to make any proposal to Parliament upon the subject. That fact seems to me conclusively to show that it was most unwise and rash, unless done for electoral reasons, to raise this question at the present time. If we are to tempt the colonies by such duties, has anyone considered and thought out how they are to be tempted? Take the Australian colonies. They send us wool and they have a monoply of the best wool in the world. They send us half our wool supply, which is the greatest export of Australia. It is well known that we buy an equal quantity of wool from other portions of the world and largely from South America. We mix a portion of that wool and export it to all parts of the world. Under these circumstances, I cannot conceive how any such proposal will benefit the Australian colonies. On the other hand, there is the beef trade. I doubt whether any such proposal in the long run would allow Australia to compete with the producers of South America; therefore you are to tax the whole of the enormous imports of beef, consumed largely by the miners and the navvies of this country, which comes almost exclusively from South America and through Holland from the south of Europe. The Secretary of State for the Colonies, on a former occasion, faced all these difficulties himself. He faced them in the speech made on the 3rd of April, 1900, and he declared them to be insuperable. What has happened since that time? On the 3rd of April, 1900, the Secretary of State for the Colonies said— He had never proposed a Zollverein. He said— It was one of those recurring mistakes of which I am so largely the victim. and he also made this curious statement, that all that he had done was to follow Lord Ripon—a curious leader to follow, for a Minister holding views such as those which are entertained by the Secretary for the Colonies. Proceeding, the right hon. Gentleman said— If there is to be any kind of fiscal arrangement with the Colonies, the only form which I myself think would be viewed with the slightest favour in this country would be that of an Imperial Zollverein, in which there should be free trade between the whole Empire. Therefore this proposal is an impossible one. In the first place, Australia will not look at it. Protection in Australia is directed against our manufactures and against India—it is directed against the cheap labour of India. I agree that if there was the slightest probability of this country being willing to consider any system of this kind it would be an Imperial Zollverein, but that would hamper our trade to a degree which few people have considered. Nothing else has the slightest chance of being considered. The people of this country are not going to raise the price of their food or put an end to their Most-Favoured-Nation treaties. The people of this country are not going to permit a monstrous injustice to be done to the people of India which this suggested policy would involve.

In conclusion, I wish to ask the House to consider for the moment how any such system would operate upon our trade. Take the case of America. We send on an average to North and South America £50,000,000 worth of British and Irish produce and manufactures, and we send a still larger amount of other things which we buy and sell. We send in an average year £20,000,000 worth of British and Irish produce and manufactures to the United States, £22,000,000 to the Latin Republics, and £8,000,000 to our colonies. What do we receive in return? We receive the whole of our cotton. We receive also an enormous amount of grain, beef, and most of our mineral oils. We also receive an enormous proportion of half-manufactured goods used in our manufactures, such as the leather used in our boot and shoe trade. Therefore the articles mainly affected would be firstly cotton, and after that mainly food. Take the case of cotton. By interfering with our trade with America we are jeopardising our exports of £42,000,000, which is more under British influence and more under the influence of British capital than even our colonial trade. It is a curious fact that we supply many of the South American States in a higher degree than Canada, and we send five times more per head of manufactures and produce there than we do to our own colonies. Are we to interfere with such a trade? Are we to tax cotton, and if not why not? You may say that we do not grow cotton in the British Empire, but we do. I do not know whether Egypt is to be dealt with as a portion of the Empire. As my hon. friends from Manchester well know, we are getting cotton from West Africa, Queensland, Fiji and India. These attempts to produce cotton within the British Empire are increasing, but up to the present time we are producing only a mere fraction of the total amount required. Are you going to tax all our cotton for the benefit of the colonial producers? Are we to tax the food, the raw material and the half-manufactured goods? I am convinced that this policy has not been thought out, and when it is clearly put before the people of this country it will be as universally condemned as it was in the time of our grandfathers.

*THE PRIME MINISTER AND FIRST LORD OF THE TREASURY (Mr. A. J. BALFOUR,) Manchester, E.

I do not know that there is very much that I can sympathise with in the speech we have just listened to, but at least I agree with the right hon. Baronet that the present is a more convenient occasion for raising this discussion than the Second Reading of the Budget, with which the great topics brought by the right hon. Gentleman before the attention of the House have nothing to do. For my own part I rejoice that this question—if it is to be discussed at all—should be discussed at a moment in which we may leave altogether on one side the scheme of the Government for dealing with this year's finances.

There was one word which recurred at brief intervals throughout the right hon. Baronet's speech, the word "heresy," which I think is not advisedly introduced when we are dealing with scientific and political questions of the kind raised this afternoon. It indicates a tendency to go back to authority and formulae which, at all events in the region of political economy, were originally used in conditions of society and of trade very different from those which now prevail, and whose modern use would certainly not be authorised by those who originally devised them. I would beg the House, in dealing with a problem which is essentially novel, not to wave the flags, now somewhat ragged and moth-eaten, which, either on the protectionist or free trade side, saw service under our fathers and grandfathers in the great battles fought fifty or sixty years ago.

The right hon. Baronet, in part of his speech, endeavoured to discuss in a serious spirit the very difficult problems in which we are now engaged. One part, however, was devoted to a less elevated object, and was intended apparently to make mischief between my right hon. friend the Secretary of State for the Colonies and myself. In that amiable intention I think the right hon. Gentleman will fail. May I ask the right hon. Baronet himself what course he thinks my right hon. friend the Secretary of State for the Colonies ought to have pursued in this connection after what occurred at the Colonial Conference last year? The Colonial Prime Ministers when, in this country were asked to confer with the Secretary of State and with other high officers of the Government upon questions material to the Empire as a whole. The result of their labours is embodied in a Blue-book, where the following expression of opinion will be found— That this Conference recognises that the principle of preferential trade between the United Kingdom and His Majesty's Dominions beyond the seas would stimulate and facilitate mutual intercourse, and would, by promoting the development of the resources and industries of the several parts, strengthen the Empire. Now I want to know whether, in the opinion of the right hon. Baronet, or in the opinion of the House at large, my right hon. friend who summoned that Conference, whose personal influence and whose personal genius has done so much to stimulate the feeling of common citizenship in all parts of the Empire—whether the right hon. Baronet or any other critic of my right hon. friend thinks that he ought to have allowed that Resolution of the Prime Ministers to sleep in the pages of a Blue-book, or whether he was not bound to raise the subject for the discussion and for the decision, not merely of the people of this country, but of the citizens of the Empire. I do not see that what my hon. friend has done with characteristic force and characteristic eloquence—can be the subject of complaint. What he has done he could not but do; and if in doing it he has greatly stirred the public interest, surely this is small blame to him.

Turning now from the more personal aspects of the question, I should like to ask the House to take a rather wider, and certainly a less polemic, view of the present economic position of the country than has been taken by the right hon. Baronet, or by, so far as I know, any of those who have hitherto taken part in this controversy. The right hon. Baronet has been constantly referring to the old free trade doctrines and has been constantly repeating the old free trade formulas. These doctrines and formulas were, in my judgment, sufficiently accurate within the limits of space and time to which they refer. But I would remind the House that the position of these Islands is now entirely different, not only from what it actually was in 1846, but, which is more important, is entirely different from what all the leading free-traders of that day supposed it was going to be. They prophesied that our example would induce the whole world to adopt a free trade policy, that this country would find itself a free trade nation among free trade nations, and they deduced from these premises conclusions with which I entirely agree. But then their prophecies, unfortunately, were wrong. There is in the whole world not one civilised free trade community, so far as I know, except ourselves. That may be a surprising result, and I am not going to examine how it came about, but it is the fact; and what is more, I do not think that any observer of contemporary tendencies would suggest for one instant that the policy in which every civilised community—including our own self-governing colonies—has thus embarked, is a policy which they have shown the smallest inclination to reverse. We therefore have to look forward in future to a condition of things in which more and more there will be a wall of hostile tariffs built up against us, in which foreign nations will increasingly manipulate their own tariffs to our disadvantage, and in which we shall less and less be able to find in civilised countries a market for our manufactured goods. Take the case, for example, of a country which is in one sense highly protectionist, but which from the necessities of its situation is obliged to take a large amount of our manufactured goods—I mean Russia. The deliberate policy of the Minister of Finance in Russia is to so manipulate the tariff that gradually Russia will be what I believe, so far as its internal resources are concerned, it has it in its power to be, and what America has long aspired to be, that is, an industrially self-contained community — not seriously dependent upon importation from foreign countries. Now, Sir, if that tendency is to go on in the future as it has in the past, a time, so far as I can see, must come when the only neutral markets open to us will be countries like China and Turkey, and within the British Empire—our own protectorates, our own Crown colonies, and India. This country, therefore, if what I am stating is correct, will then be in a position in which it will be obliged to import an even greater proportion of its foodstuffs and of its raw material than at present, and will have to pay for them by exports which it will find even more difficult than at present to dispose of to advantage. Observe, I am not treating this upon the old protectionist idea, which was that it was your business, by excluding rival manufactures, to foster your own. That is not the argument I am advancing. What I am trying to point out to the House is this: that inasmuch as Britain must more and more be a manufacturing country as distinguished from an agricultural one, inasmuch as it must more and more depend upon foreign countries for its supplies of raw material and of food, inasmuch as it will have to pay for those supplies by its exports, if we are compelled by exterior tariffs, whether in our own colonies or foreign countries, to dispose of our manufactures on onerous terms, the community will suffer. The country, as a whole, will pay an immense tribute to the other countries on which it must impose its goods in order to get from them the corn and meat and raw material which of necessity it is obliged to import. I may parenthetically remark that this effect is at present disguised by the fact that we have enormous investments abroad, that we are a creditor country on a great scale, and that we get our necessary imports not merely by the export of our manufactures, but also in payment of the debt which foreign nations owe to us as investors in their funds, in their railway enterprises, and as the carriers of the world. But as far as I understand the modern tendencies of industry, there is a stream running now the other way, and that at all events, so far as the United States of America are concerned, where at one time were some of our largest and heaviest debtors, there is a movement in precisely the opposite direction to what I have described—a movement which seems to tend in the direction of making us the debtors of the United States. If this is symptomatic of a general tendency, then I say we shall be in the position of having to pay for these necessary imports on terms which will be most onerous to the country taken, as a whole.

I hope it will be admitted that the argument I have been urging is neither "protectionist" nor unsound.

LORD HUGH CECIL (Greenwich)

No, no.

*MR. A. J. BALFOUR

My noble friend thinks it is not a sound argument, but if he is as good a political economist as I take him to be, he will recognise on reflection that it has a greater value than he is at present prepared to admit. And if I have carried the House, or, at all events, some of the House, with me so far in my argument, I would ask this question—If the conditions under which our present fiscal system was introduced are admitted on all hands not to be conditions which now prevail, if these conditions never were anticipated by those who laid deep and broad the foundations of our national finance, are not the leaders of political thought in this country bound to raise the question whether the time has not come when we must abandon, as an absolute doctrine, the principle that revenue is never to be raised except for purposes of expenditure, and whether we ought not to contemplate the possibility of having to raise revenue for purposes of wider financial scope? For example, are we really in our hearts content with a position which leaves us absolutely helpless in the face of alt foreign countries in regard to tariff negotiations? It may be said that this is the least bad of the possible alternatives; but that in itself it is eminently disagreeable I think will be admitted by anybody who has had to do with commercial negotiation. And I go farther, and I say, that if there is to be in reality an attempt on the part of foreign countries to declare that we are so fiscally distinct from our self-governing colonies that they are to be treated as separate nations, then, I say, we shall be forced by patriotism, by public opinion, by every regard for ourselves and our Empire to resist such a pretension even to the point of adopting retaliatory tariffs. Are we to be told that Canada, Australia,, and New Zealand, and India, are not parts of the British Empire, that they are to be treated as separate nations simply because we have given them fiscal independence? I quite admit that we, and we alone, so far as I know, among the nations of the world have been able to create such a thing as a self-governing colony; but is this a reason why these self-governing colonies are to be excluded from the benefits given to the colonies of less fortunate communities? I am quite sure we should never assent to such a pretension; and I am equally sure that it cannot be adequately resisted, unless we have at command some weapon by which those who endeavour to disintegrate the Empire by fiscal means may be properly met.

Well, Sir, that is one reason why we should discuss whether we may not profitably raise revenue for non-revenue purposes. But there is another, and that is, in the words of the Colonial Prime Ministers, to bind the Empire closer together. Hon. Members may say, "That is a good object, but like other good objects, you may pay too dearly for it." This is true. It is a question of price, but that the thing itself is of great value I cannot imagine anybody denying — even a leading member of the Cobden Club. The thing itself is worth getting if you can get it without paying too heavily for it. Very well, that is a thing which has got to be debated. We may well find out what it is we have to give and what it is that we want to get. The actual scheme which the Prime Ministers of the colonies desired, I believe, was that there should be a preference given to the imports from the colonies, in exchange for which they should mitigate the severity of their hostile tariffs against us. The right hon. Baronet says that the tax by which that has to be done must be either a tax on raw material or a tax on food. I can not imagine that it would be wise in any circumstances to put a tax on the raw material on which our own manufactures depend, and I do not know that such a tax has ever been proposed by anybody. Nor can I say whether the people of this country are ready to accept the other alteration and submit to a tax on food. Of course, if they are not ready, it is impossible to carry out any large scheme such as that proposed by the Colonial Prime Ministers. I entirely agree; but you will never have a tax on food, in my opinion, accepted by the people of this country except as an integral part of a large policy on which their hearts are set. With that you can do it; without it you cannot. The idea that you can go back to the old protective days and ask the people of this country to tax their food in the interests of the farmer or the miller, I do not believe is within the region of practical politics. But if by means of a tax on food you can put the whole fiscal position, and the whole Imperial position of this country on a different and better footing, is it so certain that the working classes of the country will repudiate such a policy? Supposing that as a result of a tax upon food-stuffs — a general tax upon food-stuffs—it were possible to stop this process by which, not merely in foreign countries, but in our own colonies, there was being created, under a system of protection, an enormous number of vested manufacturing interests—supposing that it were possible by such a policy as that, not indeed to attain full free trade—that is beyond the power of any conceivable combination—but to diminish protection against our manufactures now and hereafter—is this so certain to be rejected? Remember the picture I drew just now of the future of this country if existing tendencies were permitted to go on indefinitely. If you can, by some arrangement with the colonies, check that tendency so far as they are concerned, if you can keep an open market, or a market approaching to an open market, for British manufactured goods, do not you think you might be doing something which the most rigid free trader might accept as a substantial contribution to his ideals. Would the working men of this country submit to a tax on food? Would the colonies submit to a partial reversal of their protection system? These are the two all-important questions. They cannot be answered now. They can never be answered except by public discussion and examination. And unless they can both be answered in the affirmative no such plan as that recommended by the Colonial Premiers can ever be carried out.

Mr. Speaker, I always regret the manner in which political economy is treated in this House and on public platforms. It is not treated as a science, or as a subject which people ought to approach impartially with a view to discovering what the truth is, either from theory or experience. Not at all. They find some formula in a book of authority and throw it at their opponents' heads. They bandy the old watchwords back wards and forwards they rouse old bitternesses, wholly alien, as far as I can see, to any modern question; and our controversies are apt to alternate between outworn formulae imperfectly remembered, and modern doctrines imperfectly understood. That is not a fortunate state of things, and I should hope that one result of my right hon. friend's speech and of the debate to-day will be that the country will devote itself, not in a partisan spirit, to the consideration of the real economic position in which we stand, and the real difficulties we have to face now and in the immediate future, and the best way of meeting these difficulties.

Before I sit down may I say one word in addition on a more personal aspect of the question. My right hon. friend has been accused, as far as I understand it, of saying things in contradiction of, and inconsistent with, statements I have made; with having started a hare of his own; with having developed a policy quite irrespective of his colleagues. I think I have shown, as far as I apprehend the matter, that there is no contradiction between my right hon. friend's views and my own. I go much farther. Supposing my right hon. friend had done, what he has not done—supposing he had developed a policy of his own with which his colleagues have no sympathy. I cannot understand on what ground criticism is levelled against him. People say: "Oh, the Prime Minister made such and such a statement, and on the very same day the Colonial Secretary made a speech very different in spirit, if not in matter." They at first said that it was contradictory in substance as well as divergent in tone. They have given that up. But are my colleagues and I bound to come together, and not merely to consider how we can act together as a united Government, but also how every speech is to be made precisely with the same flavour of rhetoric1? The thing is really absurd; and, speaking for myself, I will not be a party to depriving others of a liberty which I have always arrogated to myself. I remember some years ago I made more than one speech, I think, and certainly wrote more than one public letter, on the subject of University education in Ireland. Those were my own opinions. I did not bind the Government; I did not mean to bind the Government. I thought, and I still think, that great good might be done by ventilating the question. If you prevent politicians who either are or have been in high office from taking an independent line upon subjects which are not part of the immediate policy of the Government, you lose one of the most valuable methods of forming and directing the public opinion which this country possesses.

AN HON. MEMBER

That is a new idea.

*MR. A. J. BALFOUR

Does the right hon. Member for Wolverhampton say that that is a new idea?

SIR HENRY FOWLER (Wolverhampton, E.)

dissented.

*MR. A. J. BALFOUR

Remember that this question is not one that this House will have to decide this session, or next session, or the session after; it is not a question that the existing House of Commons will have to decide at all. It is not a question connected with this year's Budget or with next year's. It is a question of our future fiscal policy, which requires a most careful study on its strictly scientific and economic side, and a most careful study on what I might call its Imperial and social side. How is that study to be even started on its way, how is it to be brought to any good or useful result if these official bonds are to be drawn as tight as the hon. Gentleman desires? My right hon. friend, I believe, is in absolute agreement with everything I have said to-day.

MR. J. CHAMBERLAIN

Hear, hear!

*MR. A. J. BALFOUR

But supposing he was not, supposing that on this point there was a difference of opinion between us, is that a reason why either my right hon. friend or I should keep silence? I think not; and I believe it would be an enormous loss to the really formative forces of opinion in this country if you are going wholly to prevent any man in public life from that freedom of expression on matters not immediately before the country or the House, which is possessed by the least experienced of his fellow-citizens.

I have, I am aware, trespassed at considerable length on the House, and I know that some of the arguments I have adduced have been dry, and perhaps, with my imperfect power of expression, not easy to follow. But I am convinced that the trend of thought which I have ventured—in, I believe, absolute conformity with the views of my right hon. friend [Mr. J. CHAMBERLAIN: Hear, hear!]—to develop is eminently worthy of elucidation, not merely within these walls, not indeed chiefly within these walls, but by public discussion, by the careful collection of information. Then, if public opinion ripens, if the colonies, and if the people of this country, are of opinion that we ought seriously to endeavour to put the British Empire in an economic position which would make it in any way equal to the magnificent economic position obtained by the United States, then I think we should have done well. I am certain that this scheme is practicable, but unless some other scheme having the same results can be brought to fruition,—if the British Empire is to remain as it is at present, a series of isolated economic units—it is vain for us to hope that this branch at all events of the great Anglo-Saxon race is destined to have the great industrial and political future which undoubtedly lies before the United States of America.

MR. LLOYD-GEORGE (Carnarvon Boroughs)

After listening very carefully to the speech of the Prime Minister I do not think any hon. Member has the slightest conception of what the policy of the Government is. The Prime Minister said something about not being responsible for the rhetoric of the Colonial Secretary. That was a very necessary disclaimer; but does he treat the speech of the Colonial Secretary merely as an exhibition of fireworks, or is it a declaration of policy on behalf of the Government? That, I think, the House of Commons is entitled to know. The Prime Minister forgets. He is not a member of a debating society. He is the Prime Minister, responsible for the Government of this country. What we want to know from him, and what we are entitled to know from him, is whether he, as Prime Minister, really means to endorse the policy of the Colonial Secretary to carry out what he calls fiscal reform in this country on the basis of preferential tariffs with the colonies. The Prime Minister said that this was a matter of discussion among leaders of thought. If he thinks it is a proper subject for a paper at the Colonial Institute, or to be dealt with in an economic review, no one would have a word to say about it. It would be on a par with such a question as whether the execution of Mary Queen of Scots was justifiable, which debating societies still discuss. But the practical question is whether this is a policy which the Prime Minister is to submit to the country. Let me remind the House of Commons, that the first time it was mentioned in this House as a practical matter was by the Colonial Secretary on Friday, when he said that old-age pensions were not dead, that it was a practical matter at last. The right hon. Gentleman shakes his head. Has it ceased to be a practical matter since Friday?

MR. J. CHAMBERLAIN

I only shook my head in protest against the continual and most improper action of the hon. Gentleman in invariably misquoting his opponents.

MR. LLOYD-GEORGE

I am in the recollection of the House as to what happened on Friday. We complained that the matter was not seriously treated, and that it was not intended to deal with it. The Colonial Secretary then said it was not dead, that it was going to be dealt with; and, not only that, but that it was going to be dealt with by the fiscal reform of this country. What does that mean if it does not mean that it is a practical matter?

Mr. J. CHAMBERLAIN

I did not say what the hon. Gentleman says I did. What I said was that it could not be dealt with without a review of the fiscal policy.

MR. LLOYD-GEORGE

I recognise at once that there is a distinction. On Friday last we understood that there was a pledge to deal with old - age pensions. We understand now that there is no pledge to deal with the question. The Colonial Secretary now says that if it is to be dealt with in the remote future, it can only be dealt with by a scheme of preferential tariffs. That is a different matter; but we are entitled to know from some representative of the Government whether it is to be merely a matter of debate or discussion on platforms, or whether the Government are going to deal with it before they go out.

*MR. A. J. BALFOUR

I do not know about going out; but we will not deal with it before the dissolution.

MR. LLOYD-GEORGE

It is not to be dealt with before the dissolution. I am afraid that does not carry us much further. But the Prime Minister has not told us whether this is the policy which the Government is to submit to the country. That is the important matter after all. I agree it is a matter to be discussed thoroughly; but how can it be discussed unless the Government submit a definite proposal? We are told we are to have a preferential tariff with the colonies. We get practically nothing from the colonies except raw material and food. Raw material the right hon. Gentleman will not tax; therefore, there remains only food. When we pressed him whether he was for or against the taxation of food, he indulged in vague generalities, which showed that he had it in his mind that food would eventually be taxed. If that was the case is it not fair that the country should know? What do we get from Canada? We get timber, cheese, butter, cattle and wheat. Are we to tax corn? But the right hon. Gentleman has abandoned that. He is blowing hot and cold. Is the right hon. Gentle man going to put a tax on cattle? I was very glad to hear the speech of the Secretary to the Board of Trade. According to him, cheap food is to be put in the same category as indecent literature.

MR. BONAR LAW

The hon. Gentleman is mistaken. It is not a question of decency, it is a question of literature which invades British copyright.

MR. LLOYD-GEORGE

Very well. I should like to know whether it is to be applied to foreign cattle, corn and lumber. Lumber is very important to Canada. Is timber from Sweden and the United States to be taxed? We are entitled to know all these things. It is not a question of talking generally about the Empire. Whenever we come to particulars, we are always told something about the basis of the Empire. Well, we are all for the Empire, certainly. I should like to know who is against the Empire. We may have different views as to the best method of administering the Empire, as we have about education, theology and religion. We may have different views as to religion; but that does not mean that we are irreligious. The same thing applies to the Empire. The Colonial Secretary from time to time has been the instructor of the House on the question of free trade. Twenty years ago, curiously enough, the present Chancellor of the Exchequer—when the Colonial Secretary was holding a different office, and when the Chancellor of the Exchequer was the President of the Board of Trade,—introduced a Motion which rather savoured of protection. He was answered by the present Colonial Secretary, who made a most persuasive speech and converted the right hon. Gentlemen the Chancellor of the Exchequer to the principles of free trade to such an extent that he has been a fairly good and respectable free-trader ever since. It is rather hard on him that he should be lured back into his evil ways by the very missionary who was responsible for his conversion. There are one or two passages in that speech to which I should like to refer. The right hon. Gentleman in that speech spoke of— The new doctrines, fair trade, reciprocity, and retaliation, of which we have heard so much and know so little, and with respect to which we are naturally anxious to have accurate and definite information. That was a reasonable position for the right hon. Gentleman to take up, and that is the very reasonable request which we now address by way of the Colonial Secretary to the Prime Minister. The right hon. Gentleman proceeded to use words which had so strong a bearing on the present position that I must ask leave to quote them, not by way of scoring off the Colonial Secretary but because they so well express our own views in regard to the matter under discussion— I had hoped, in view of this debate, that at last we should be able to grasp the phantom which has so long eluded us. But I confess that these expectations have been disappointed, and that even now, after having listened attentively to everything that has fallen from the right hon. Gentleman's side of the House, I am still in the dark as to what they mean, and as to whether they understand their own meaning themselves. It is gratifying, no doubt, to be assured, as we have been by all of them, that they are opposed to protection and in favour of real free trade. But it is difficult for a plain man to reconcile these assurances with the other statements which they have made. We have had expounded to-night several shades in the new heterodoxy, which seems at last to have secured the patronage of the Conservative Party. The Prime Minister objects to the word heresy which was used by the right hon. Baronet the Member for the Forest of Dean. I give up the word "heresy" and adopt the word of the right hon. Gentleman, "heterodoxy." Who would have thought that twenty years later the patron saint of the Conservative Party would have been the right hon. Gentleman the Colonial Secretary? Nothing could be better as a reply to the Government than a reprint of this speech against the Colonial Secretary's present proposals.

We have had simply vague words and suggestions, and even now the Prime Minister does not tell us what he proposes to do. The right hon. Gentleman talks about a "tendency," and a "contingency," and it is upon words of that kind that he proposes to recast the whole of our fiscal system. Take the case of Germany, our most formidable competitor in Europe. From 1897 to 1900 our trade had increased from £32,000,000 to £38,000,000, and the same may be said with regard to the United States of America. It has been said that it is our business to follow the example of the United States, but does not the Prime Minister know that the trade per head of the population, great as it is, is as nothing compared with the trade per head of the white population of the British Empire. The Prime Minister also forgets another thing, and that is our great shipping trade. It is perfectly true that in the case of France if we show a balance sheet of the imports and exports we seem to be losing money, but 43 per cent. of the tonnage of that trade is carried in British bottoms. We do the carrying trade of the world. Then something was said about Argentina, but nothing more astonished me when I was over there than the fact that the whole country is run by British capital. Great Britain dominates everything and everything is run by British capital and British managers. It is perfectly true that the Germans are selling cheap goods to the Argentine, but they are beginning to understand that if they want good articles they must go to the British firms for them. Instead of depending on these quack remedies, which may catch the unwary, which may appeal to people who are not leaders of thought; instead of misleading them, and perhaps eventually inducing them to bring pressure to bear on Governments to interfere with a system which has produced the greatest trade the world has ever seen, it is time the Prime Minister exercised his responsibility and influence to point out the folly and danger of pursuing a policy of that kind.

LORD HUGH CECIL (Greenwich)

I do not wish to detain the House more than a few moments. I wish to express my very great gratitude to my right hon. friend the First Lord of the Treasury, not only for his exceedingly interesting speech, but also for the still more interesting interruption which he made to the hon. Gentleman opposite when he assured the House that there would be no change in the policy of the Government before the dissolution of Parliament. That certainly removed from the minds of many supporters of the Government a great weight. I cordially agreed with what my right hon. friend said, that nothing could be more narrow-minded than to say that fiscal questions connected with revenue and with import and export duties, questions which we ordinarily call free trade and protection, are to be shut out any more than any other subject from perfectly free discussion. At the same time one cannot help feeling that in the distinction my right hon. friend made there is need of a warning. A heresy is not the same thing as a breach of a scientific law. For many practical purposes a breach of a scientific law is a much more awkward thing than a heresy. It is precisely because I believe that the fundamental propositions which were laid down fifty years ago were propositions of a scientific character, and had relation to abiding principles lying in human nature, and were not, therefore, of a temporary application, that I am so glad to learn that no propositions were to be laid before the House which were alien to those principles. I do not agree with my right hon. friend's interesting observation about the danger of our being shut out altogether from foreign markets, and for this reason. It is obvious that, if there are to be imports into this country, those imports are not for our convenience and benefit alone, but also for the convenience and benefit of the foreign producer. And it is quite clear that if there are to be great imports into this country of many valuable commodities, it can only be, if the mechanism of prices so adjusts itself, that there may be a corresponding amount of exports to the countries which send those goods to us. The conception that foreigners can derive the benefit of a closed market in which they can sell their goods at any value they like, and also can have the enjoyment of our market, is a profound error; and if my right hon. friend would give his attention to the subject he would see that that is not an argument that he can maintain. But I did not rise at the present moment to go into this discussion. I quite recognise that we have before us a period of discussion of a very interesting character relating to matters of political economy. I have no doubt that that matter will be argued on the one side and on the other, and I fully understand what my right hon. friend said, that Members of the Unionist Party, without any question of loyalty being involved, will be at perfect liberty to take the one side or the other.

But we have to have regard, not only to fiscal, but also to political matters; to the economical necessities of this country as well as to the political benefits of the whole Empire. I feel very strongly, when we have regard to the political side of the question, how strong the case is against altering the present fiscal system. I am unable to understand how we can adjust an elaborate system of tariffs, ostensibly for the benefit of our colonies, without involving ourselves in a series of the most angry and difficult negotiations, which, so far from strengthening the bond which unites us now to our brethren across the seas, would tend to throw the apple of discord amongst us, and therefore, from the political not less than from the fiscal point of view, would be a profound mistake. Let me say that I join most heartily in desiring to see the colonies drawn more closely to the mother country, and I resent as warmly as any human being can resent, the attitude which the German Government have adopted in regard to Canadian preferential duties. We do not for a moment range ourselves on the side of the hon. Member for the Carnarvon Boroughs, whose zeal for the Empire is less only than his zeal for Church schools. We remember, with heartfelt gratitude, the sacrifices and the loyalty of the colonies in the late war. Indeed, loyalty is hardly the phrase. We do not speak of Devonshire or Cornwall as being loyal, and the time is past, I hope, in which it is necessary to speak of Canada or Australia as being loyal to this country. We are united by the warmest bonds of attachment, and I hope we may long remain so. But I do not believe, and history goes to disprove the theory, that a fiscal arrangement should precede a political arrangement. On the contrary, I believe that a political arrangement ought to precede any fiscal arrangement that may be possible. Personally, I cannot conceive of any fiscal arrangement which it would be wise and proper to extend to the whole Empire except that system of free trade which has been so beneficial to the United Kingdom. I am sure the statesmen of Canada and Australia are most profoundly mistaken; they are under the influence of industries which have grown up under a protectionist system; they are leading their great communities along a false path, and the mother country cannot do them a greater service than that of constantly reminding them that our abundant prosperity arises out of a wise fiscal system. But whatever the fiscal system may be, political unity is the first question, and though it is exceedingly difficult—difficult by reason of geographical considerations, and also by reason of the peculiar character of the British Constitution—the organ of Government is so diffused, its whereabouts is really so uncertain, nobody knows whether it is in the House of Commons, in the Cabinet, in the Crown, or in the House of Lords—but though it is so exceedingly difficult to amend the Constitution by bringing in colonial representatives or by any other arrangement, nevertheless it is to that side of the problem rather than the fiscal side we ought to direct our minds. If it is a question of sentiment, if fiscal union is supposed to be a valuable method of fostering warm sentiments between the mother country and the colonies, or between the colonies and the mother country, it is superfluous, because those sentiments could not be warmer than they are to-day. If all that was wanted was that we should be sincerely attached to our colonies, and that our colonies should be sincerely attached to us, federal union would be achieved to-morrow.

With regard to the very real grievance which Canada may feel against Germany, I cannot help thinking that there are many ways besides fiscal measures of expressing our resentment at any ill-treatment to which our colonies may be subjected. I think there may be opportunities in the diplomatic sphere. The friendship of this country is an asset, and foreign statesmen ought to understand that that friendship cannot be more profoundly alienated than by wrong done or insult offered to any of our colonies, or more effectually conciliated than by those colonies being treated in a manner which we believe to be fair and right. We ought to resent, and the British people do resent, anything in the nature of a slight upon Canada or Australia more deeply than they would resent a slight upon themselves. The feeling towards the colonies which now animates the British people is of so warm a character that every foreign statesman ought to bear in mind that we should resent anything done against our kinsmen across the sea not less, but more than we resent anything done against ourselves. We are not, politically speaking, an ephemeral people. In 1884–5 Khartoum fell. It made a profound impression at the time, but the impression appeared to pass away. Nobody spoke of the loss we had sustained or the ignominy we had undergone. But after the battle of Omdurman it was seen how profound an impression had been made; there was an astonishing outburst of public feeling, audit was understood how grateful the British people can be to have an opportunity of wiping out old grievances and paying off old scores. The same was true with regard to South Africa. Twenty years elapsed between the wrong done and the war, but it was not forgotten, and experienced politicians were amazed at the depth of feeling that was elicited when the opportunity came to wipe out that grievance. As it was in these matters, so it will be in respect of any wrong or insult which foreign nations may do or offer to our colonies. Ten years hence it will not be forgotten. Supposing there be a Continental crisis or some occasion on which the friendship of this country is of importance to Germany, it will not be forgotten if Germany has not treated one of our colonies as we consider it ought to have been treated. These considerations cannot be publicly stated by Ministers of the Crown, but they can and ought to be brought home to the minds of statesmen on the Continent, and I cannot but believe that, without any question of fiscal re-adjustment, they will suffice to protect us and our colonies against what we consider to be ill-treatment.

In discussing this question let us on all sides speak our minds without heat and with perfect frankness and candour. Let those of us who sit on this side, who are members of a great historic constitutional Party, not be afraid to utter the beliefs we have long held, which the Party to which we belong have entertained for fifty years, and which we have been accustomed to associate—and which all the evidence goes to justify us in associating—with the abounding prosperity of our country. Let us speak our minds frankly, and urge our view, whether it be a right or a wrong view, at every opportunity that may offer, and just as the Finance Bill, which I think a great majority of the Party will support with unfaltering voice and step when it is brought before us, is in perfect conformity, as the Budgets of the last fifty years have been, with that fiscal theory which we are accustomed to call free trade, so I hope the Budgets for fifty years to come may in the same way conform to what has done so much good to the country, and is, I am persuaded, for the truest Imperial interests of the future.

MR. J. CHAMBERLAIN

I think we must all have felt that there is a certain unreality about this debate, because it is being carried on in the prospect and expectation of a still greater debate. Notice has been given on behalf of the Party opposite, and on behalf of the Leaders of that Party, for a discussion on this identical subject, to take place on the Second Reading of the Finance Bill. Therefore, I suppose we must assume that the present is only an affair of scouts, and that hon. Gentlemen on the other side who have addressed us hitherto have been acting on behalf of the Leaders of the Party, as spies in a sort of military reconnaissance. [OPPOSITION Cries of "No!"] Yes, spies—I use the word only in a military sense—as part of a reconnaissance to find out what are the weak points in our position. That, as I say, prevents this debate from assuming the importance which the subject demands. But for my part, I should not think it wasted if it had only produced the speech to which we have just listened—the very interesting and very moderate, and very suggestive speech of my noble friend the Member for Greenwich. I would like to make one or two remarks about that speech. I think my noble friend has fallen into the error, which seems to me to have been the mistake made by everybody who has spoken in this debate except the Prime Minister, of supposing that a new policy has been proposed to the country, involving at a stroke an entire and absolute reversal of the whole of the fiscal policy of this country. I am absolutely unaware of any such proposal having been made either by myself or by anybody else; and before I sit down I will show how very much more limited is the suggestion which not for the first time, but on several occasions during the last five or six years, I have put before the country. A second statement of my noble friend was to the effect that we were not hastily to deal with the fundamental propositions of that great historic doctrine which, in his judgment, had in its practical application done so much for the prosperity of the country—the doctrine of free trade. But my noble friend failed, as everyone else has failed, to tell us what he means by free trade. It is perfectly clear that everything depends on the definition. We may quarrel to the end of time unless in the first instance we come to some sort of conclusion as to our terminology. I have always understood that the definition on which Mr. Cobden himself relied was that free trade was to bring about the free interchange of commodities at their natural prices. With regard to the definition given by my noble friend, it will not be interfered with by me nor, I think, by any of my right hon. friends on this side of the House. We are perfectly content to accept interchange of commodities at their natural price, and I think we may go further with regard to that definition and its strict application. But in our opinion there are certain deviations from this doctrine of free trade which we say necessitate the careful and, in a sense, the immediate attention of the country and of this House.

My noble friend, in appealing to the Party behind him, alluded very naturally and rightly to what he called the traditions of the historic Party with which he is connected, and sought to identify the Conservative Party with the doctrines of free trade. I do not know that that could be wholly sustained, though no doubt Sir Robert Peel claimed to be a Conservative when he introduced free trade. But, at all events, my noble friend was justified in saying that, for a very long period—more than a generation—that fundamental doctrine has been adopted by the Party to which he belongs. That is not inconsistent with anything I have said in the speech which has formed the text of this debate, and which it has been to me somewhat of a surprise to find has aroused exceptional attention. There is nothing in it except the rhetoric to which the hon. Member for Carnarvon alluded so gracefully, which no doubt differs in his case and mine and other orators—with the exception of the difference in rhetoric there is nothing in it which was not precisely the same as the speeches which have been delivered on more than one occasion by the late Prime Minister, calling attention to exactly the same dangers for which I ask consideration. Nor does it differ from the speeches made by my right hon. friend the Prime Minister in reply to the deputation which waited upon him in the Albert Hall in reference to the Corn Duty. Nor does it differ from the speeches that I have made myself on the subject for the last four or five years. However, I find that this greater interest is caused by an obiter dictum of mine to the effect that it was quite possible that the issue at the next General Election would not be the issue that some hon. Gentlemen have anticipated, but that it may be in connection with this very great and, in my opinion, more important subject. What does the Opposition want to get out of this debate? If I am to judge from the speeches made, they want to know whether the Prime Minister and myself are in sharp disagreement. They have had the answer, and I do not know whether it is at all what they expected. I wish, however, to say in order that there may be no mistake as to my part in the matter, that I agree with every single word that fell from my right hon. friend. As far as I know there is no difference whatever of principle between us in reference to this question. Well, the hon. Member for Carnarvon, in a speech which really would have been humorous if it had been a little more good-natured, asked whether this subject was to be discussed as a debating society matter, and he made a humorous allusion to the Colonial Institute and other associations which discuss questions which are not in any sense immediately practical or in regard to which theories have to be considered. I answer that question in the negative. I do not think that a discussion to which we invite the House and the country is a debating society discussion. It is much too serious a matter for that, as the hon. Member will yet find out. It will not lend itself to the very light treatment which he has given it. Although nothing has been suggested in the nature of an entire reversal of the fiscal policy of this country, yet undoubtedly there will have to be a new mandate given to the Government if the suggestions which I have thrown out are to be carried into practical effect; and that new mandate will involve many considerations of the utmost importance, affecting not merely the prosperity of the country, not merely the general question of the wealth of the country, but going deep into the condition of the working classes and their interests. And therefore, I do hope that in the great debate we are anticipating the subject will be treated as my noble friend has treated it, with all the seriousness which it deserves. The hon. Member for Carnarvon wishes to know whether the question will be raised at the dissolution. Sufficient unto the day. In the meantime he, as well as others, will have to discuss the subject in the country. In regard to that, as far as I am concerned, I will do everything which my limited power will permit to bring the question in all its bearings before the people of this country.

MR. LOUGH (Islington, W.)

What question?

MR. J. CHAMBERLAIN

I do not in the least object to the curiosity of the hon. Member, but he need not be in such a hurry. In the course of the debate somebody asked for a plan If by "a plan" he means a detailed scheme of some new tariff or some new fiscal arrangement or reciprocity treaty, nothing of the kind can be produced at the present moment; and that is not the question I have raised, or which has been raised by the late or the present Prime Minister. What we raise in effect is a principle. It is a question which we put to the people in this country. In my speech, if I may be permitted to refer to it, I called attention in the first place to what I considered the opportunity existing at the present time, and the importance of seizing the opportunity of making preferential arrangements in the nature of a reciprocity agreement with our colonies. [An HON. MEMBER: At the present time?] Yes, but that does not mean this week. And, in the second place, I called attention to the fact that under our existing system we are helpless and totally impotent to bring any influence to bear on foreign countries if they attack our colonies, or if they attack us in any manner which we consider would be unfair or would seriously endanger our industries. As long as we can only say to them, as we did in 1902 to the Colonial Premiers, that what you propose is against the fiscal system of this country, so long we have no weapon in our hands and we cannot meet the attacks upon our colonies or the attacks upon ourselves, which are already serious and which may become much more serious. Now these are the two points which I have brought before the country; and the question which I asked and on which I invited discussion was, "Are you determined to maintain your interpretation of free trade with such severity that you refuse to give us power to meet these cases?" If so—if that is the answer of the country—then let us announce that answer to our colonies; for nothing could be worse than to leave them in doubt. Let us say then, to our colonies, "No matter what you are prepared to do for us, no matter how much consideration you will give to our produce, no matter how largely you are prepared to approach free trade between the different parts of the British Empire, it is no use your coming to us asking for anything in the nature of return because our fiscal system, strictly determined by the mandate of the constituencies will not allow us to give you anything." In the second place, we might say, "If you want to do any service to us which is likely to arouse any kind of animosity or opposition on the part of a foreign country, we are bound to tell you that we cannot help you. There is nothing that we can do to bring that foreign country to its bearings, and to secure the defence of your interests."

My noble friend said, in very eloquent terms, that no one would resent, or does resent, more than he does the action which has been taken by Germany in regard to the case of Canada. Let me point out—and I regret if there should be any invidious reference to Germany—but I am obliged to refer to Germany, as Germany is the only country which has taken hostile notice of these preferential arrangements with Canada. Neither France, nor Russia, nor the United States have taken objection, but Germany alone has penalised Canada to the extent of a very large additional duty. Why? Because Canada has freely and voluntarily given, to English products this preferential treatment. My noble friend thinks, apparently, it is sufficient to say that we are a people who remember for a long period, and that some day or other we shall catch Germany in a hole. That is essentially my noble friend's remarks. That may be very good; but does he think that Canada is likely to be satisfied with that? What has happened? Canada gave us this preference five years ago, and for five years she has been penalised. We have been bearing hot resentment in our bosom. Much good that does to Canada; and we are to go on bearing it for the time which elapsed between the death of Gordon and the final conquest of the Soudan. Whatever else that may be, it is not business. Supposing that we had, in consequence of the decision of the people of this country, to make that statement to our colonies (of course all these would be matters to be presented to the people), I could prophesy and I could express my opinion, but I cannot ask anyone to accept it who does not place confidence in my judgment in such matters. It is my honest opinion, which I felt bound to bring to the notice of the country, that if you make that reply to your colonies you must, in the first place, give up all hope whatever of anything in the nature of closer fiscal relations with them; and, in the second place, in the absence of that closer fiscal relationship you must abandon all idea of securing closer political relationship. If you have neither closer fiscal relationship nor closer political relationship, then I continue of the same opinion which I expressed at Birmingham—that a united Empire will be beyond the bounds of possibility. It is because it is of immense importance that I ask the House to join eagerly in the discussion to which I invite them. My noble friend says that he does not see that it would be advisable to commence progress towards a closer union with the colonies by taking the fiscal union first. Well, all I can say is that the great example of the world is altogether opposed to the conclusion of my noble friend. How was the union of Germany effected? The union of Germany was effected in the first instance by a Zollverein. [Cries of "No, no."] I maintain that position. At all events that is my opinion. It could not have been achieved without a Zollverein. Of course the processes of blood and iron have contributed, and are contributing, to weld it together. These are not processes which I suppose my noble friend would suggest to use in the case of our self-governing colonies.

LORD HUGH CECIL

What about England and Scotland?

MR. J. CHAMBERLAIN

I am prepared to admit that case, but I consider that it is irrelevant to my argument. Now I have said that this matter must come before the people of this country, and they will have to give an answer. They will give an answer, I am perfectly certain, for or against in no mistakeable terms. Hon. Members opposite think the answer will be given in opposition to any change, and that therefore the raising of this question will be to them of great advantage. Under these circumstances I am sure they will be grateful to me for the service I have rendered to them. All I can say is that I will make no electoral prophecy at the present time, but I can say that I have generally found the prophecies of the other side to be wrong. Therefore I do not contradict them or set up any alternative prophecy. I am bound to consider the possibility, at any rate, that the views of the nation may be in favour of some such change as is the subject of this discussion. Now in that event when we have got a mandate then will be time to produce the plan. Everybody knows that a plan in the sense of a definite and complete scheme is absolutely impossible until we know a great deal of the matters into which we have still to inquire, and into which we cannot inquire profitably or advantageously unless we know that we have got the country behind us.

Suppose we have the authority of the nation to enter on the consideration of the subject, the first thing we have to do is to go to the colonies. Now, nothing would be worse than to negotiate with the colonies, and probably come to an agreement, and then at the next general election find that the whole idea was repudiated by the country. I can conceive nothing more dangerous to union than that. Therefore, before we begin to negotiate with the colonies, we must have some knowledge of what is the opinion of the people of the country with regard to the principle at stake. Now, the first thing I should do if we get a mandate to carry it out would be to consult the colonies. In that case I should call another conference, representative of the self-governing colonies, and I have not the slightest doubt myself that, as the result, arrangements which we should consider were perfectly fair between the two parties—arrangements, that is to say, which gave us as much as we gave them—could be completed with all the colonies. [Cries of dissent.] That is my opinion, and against that let the House set the opinion of the right hon. Baronet the Member for the Forest of Dean. I do not know what ground he has for pronouncing beforehand the opinion of Australia as a whole. It is a very difficult thing for him or for me to anticipate beforehand what will be its opinion. I am quite sure that everything will depend upon what we have to offer. It is perfectly certain that we have something to offer them. For instance, the hon. Baronet suggested that we should offer them a preference on wool, and he pointed out that that would not be of the slightest advantage to them. Assuming for the sake of argument that his statement is correct, does he imagine that we should be such fools as to offer the Australian colonies something that would be of no advantage to them, and expect them in return to alter their system and to give up protection in our favour. All this must be a matter of negotiation. My noble friend says, without doubt or hesitation, that if you are going to make these treaties of commerce with the colonies irritation will arise, and that he can conceive nothing more likely to promote disunion. That is an argument against any treaty at all. We must never try to make a treaty with any country, not even with our own children, for fear that in the course of the negotiations we may fail to come to an agreement and that the position may be worse than before. Surely, at least, we may assume as between people of the same race and blood we should begin the negotiations with the most friendly feelings towards one another; and surely we may assume that we shall be able to come to a satisfactory agreement, or at all events to part as good friends as when we met. I see no difficulty in entering on such negotiations. I should not have the slightest fear of any danger arising from them.

Then there is another thing which we have got to find out. In order that a conference of this kind may thoroughly discuss the matter we must know from our own people not only what they can give but what they want in return. I want to know from every manufacturing district in this country, and I hope I shall learn before long—for I see the Chambers of Commerce are everywhere taking the matter up, and they will give us their assistance in arriving at a conclusion—what particular article or articles of manufacture produced in the district could be much more largely sold if preferential rates were given by the colonies, and also to what extent these preferential rates should go in order to give a substantial advantage. The House will see that all this will necessarily take time, and the claim of hon. Gentlemen opposite that we should, without this information and before we get anything in the nature of an expression of general agreement from the people of this country, put a plan before the House in the shape of a series of draft agreements with all the colonies seems to me to be the height of absurdity, and it would be absolutely impossible to agree to it.

MR. LOUGH

The right hon. Gentleman should tell us his plan.

MR. WINSTON CHURCHILL (Oldham)

The right hon. Gentleman invites us to discuss this matter. How can we discuss the question unless we know, at any rate, the outlines of his scheme.

MR. J. CHAMBERLAIN

I have shown to the House pretty clearly I think that nothing in the nature of a complete plan can be put before the country. But it does not require much acumen to see what are the general lines which any arrangement of this kind must follow. [OPPOSITION cries, "What are they?"] It is hardly necessary for me to explain them, but I will for the benefit of the hon. Member for West Islington who has not been able to gather them for himself. I have said that I conceive it to be possible—I will put it no higher than that—to make preferential arrangements with the colonies which would be beneficial to both sides. But if there is reciprocal preference it is clear that we must have not only something to receive, but something to give. It is clear, also, that what we have to give must be given on some great product of the colony, and as the hon. Member for Carnarvon with greater perspicacity than the hon. Member for West Islington has perceived the preference must be given either on raw material, or on food, or on both. That is pretty simple I should have thought. I will go a step further. When the hon. Member for Carnarvon attributed certain statements to me I was compelled to say I did not accept his quotations as correct. He said that I was in favour of taxing raw materials and food. Of course the hon. Member had no right whatever from anything I have said to say anything of that sort. In my opinion—and this is only a personal opinion and do not let me be told afterwards that I am now laying down some law of the Medes and Persians, that is never to be altered and by which I am in future to be governed, because as I have said these inquiries are to be instituted which may throw further light on the subject. I quite understand that the allusion to further light on the subject is one which hon. Gentlemen opposite will be glad to make light of.

MR. LAWSON WALTON (Leeds, S.)

; Did not the Prime Minister tell us that it was not proposed to levy any impost either on raw materials or on food?

MR. A. J. BALFOUR

Certainly not.

MR. J. CHAMBERLAIN

No, the Prime Minister did not say that. What I was going to say when I was stopped is that without binding myself for all time—[OPPOSITION laughter.] I must say this is extremely discourteous. I say that without binding myself for all time or without shutting my eyes to possible further fresh information, so far as I can see, it will not be necessary to put any tax at all on raw material, and that for obvious reasons. It will be very difficult to choose the raw materials which would be suitable to this purpose. If a tax were put on raw materials it would have to be accompanied by drawbacks on the finished exports, and although that is not at all impossible it would be a complicated way of dealing with a matter which could be dealt with much more simply. Therefore, we come to this. If you are to give a preference to the Colonies—I do not say that you are—you must put a tax on food. [OPPOSITION Cheers.] I make hon. Gentlemen opposite a present of that. I am prepared to go into any workman's house, or any labourer's house, or to address meetings of workmen or labourers, and taking certain hypothetical calculations—for instance that there was to be 1s. or 2s. put on corn, and making assumptions of that kind, I am prepared to say to them, "Now this policy if it is carried out will cost you so much a week more than you are paying at present for your food." I set aside altogether any economical question as to whether they would or would not have to pay the whole of the duty that might be imposed. "I will assume for the sake of my argument that you pay every penny of the duty, and, having assumed that, I will tell you what the cost will be. I know how many loaves you consume; I know how much meat you eat; I know what you take of this, that, and the other on which it may be proposed to put a duty, and I will give you a table from which you can tell for yourself how much extra wages you must get in order to cover the extra expense of living." And that is the argument to which hon. Gentlemen opposite will have to give their serious attention. If they can show that the whole of this business will mean greater cost of living to the working men and no increase of income, well, Sir, I have not the least doubt whatever that all their most optimistic prophecies will come true. But if I can show that in return for what I ask I will give more than I take, then, poorly as they may think of my judgment, I may still have a chance.

That also suggests another inference that has been made by hon. Members: opposite. Suppose you put a duty, not for the purpose of protection—not at all—but I for the purpose of gaining these advantages—having something to give to your colonies—suppose you put a duty on these products, I suppose it will produce a very large revenue. We do not want that revenue for the normal expenditure of the country, therefore we shall have a large sum at our disposal. Then to whom shall we give that sum? In the first place, I ask who is going to pay the tax? The working classes are going to pay three-fourths of it, because it is the calculation that in all taxes on consumption the poorer classes pay three-fourths and the well-to-do one-fourth. But the argument would be the same for any other proportion. That being so, according to my mind it is a matter of common justice that the working classes are entitled to every penny of the three-fourths; and I would give them without the slightest hesitation the other one-fourth as well, because I have always held—it has always been part of my speeches on this subject of social reform—that while it would be absolute confiscation to put the cost of social reform wholly on the shoulders of one class, and that the richer class, the minority, yet on the other hand it is fair and right that they should make a contribution in return for the indirect advantages they gain from the great prosperity and contentment of the country. Therefore I should consider that any Government which imposed these duties—in addition to all the collateral advantages to which I have referred—would have a very large sum of money at their disposal, which they ought to and must devote to social reform. That led me to say the other day that old-age pensions or anything else which cost large sums of money, which have hitherto seemed to me to be out of reach of immediate practical politics, would become practicable if this policy were carried out. That is another argument which hon. Gentlemen opposite will have to meet. When I am talking to a working man and asking him to compare advantages and disadvantages, another argument—I tell it you in anticipation—will be, "Not only will you get back any benefits intended entirely and alone for you, but the whole sum you have paid you will get, in addition to the whole of what is paid by the richer classes." That may or may not have any influence on the controversy; but, at all events, the working man, in addition to any direct advantages he may get through increased trade and increased wages, will be enabled to press on the attention of this House a good number of social reforms, which at present cannot be considered with any advantage.

This is a very large subject. I have said that this tax is not intentionally protective; but I do not want to deny for a moment that incidentally, and so far as it goes, it is protective. That is to say, you cannot put a duty on corn beyond a certain amount. I am getting into economics again. I know that some people contest very strongly how much of a duty is protective or not; but still, I should say it would be generally admitted that, if you were to put a considerable duty on corn, that would be to a certain extent protection for the farmer. Although that is not the intention, I admit that it must be the consequence of the tax. And that will also justify some argument; but it will not be in any case an unmixed evil. There is no doubt whatever that the state of agriculture has been, and is, a very serious question for this country. The continued reduction of our home food supply is a matter which has been found of so much importance as to justify the appointment of a Special Commission; and it is perfectly clear that anything which increases our home food supply would have some advantages which might be set against any disadvantages which accompany protection on articles of food. That is really all I have to say in regard to so much of my speech as referred to the prospect or possibility of preferential rates with our colonies. But there is the second question. How are we to defend our colonies? How are we to operate in the case of Germany, for instance? What have we to say to Germany? We have already made representation after representation to the German Government with reference to the case of Canada, and that Government has not felt itself able to do anything. And I do not see how the German Government can until the German people find out that they cannot wreak vengeance upon Canada without suffering to some extent in their own pocket. But there, again, do not let my noble friend go off with the idea that if I had a mandate to deal with this question I would go to Germany and clap on a big duty on every German product, and make this a protected country to the extent of every import Germany sent here. Not at all. I should go to Germany as a negotiator, and say to her, "If you cannot meet us in this, I am afraid I shall have to put a duty on that." It would not be necessary to affect the whole trade with Germany, or anything like it; and, of course, I should have to consider where I could put these duties with least danger to ourselves, and to bring home most effectively to the German mind the impolicy of their conduct towards Canada.

MR. WILLIAM REDMOND (Clare, E.)

You could refuse to collect Germany's debts for the future.

MR. J. CHAMBERLAIN

I would remind the hon. Member that Ireland, his own country, has suffered perhaps even more serious injury than England. It has been the commonplace of Irish orators, especially of the Nationalist Party, to say that it was the brutal violence and oppression of this country which imposed free trade upon Ireland, and which, therefore, has caused the destruction of agriculture in Ireland. While England, as a great commercial and industrial country, has benefited, Ireland has suffered out of all proportion. Whether that is true or not, I say incidentally that it is clear this question will be interesting to the constituents of the hon. Member.

MR. WILLIAM REDMOND

I beg to say that when I made an interruption to the right hon. gentleman I offered no opinion on his very interesting suggestions. If you want to placate Germany you ought to reduce your fleet.

MR. J. CHAMBERLAIN

I need not elaborate the point. It is absolutely necessary that we should have power to put duties on certain things if we are to retaliate in any way where our colonies are injured by the reprisals of foreign countries. There is only one other point that will have to be considered. Is it not conceivable that we shall have to defend our own trade against unjust competition—not against free exchange of commodities at their natural price, but against something which I believe is absolutely new and to which I am afraid insufficient attention has been given up to the present time? Has the House considered what is the practical working of the great trusts which are now being formed in America, and in Germany, and on the Continent—the enormous aggregations of capital wielded by one man, by a single brain, and which can be brought to bear in the way of destroying a particular industry in this country without running any risk whatever? We are the one open market of the world. We are the one dumping-ground of the world. Now what happens? Let me try to make that clear. Let us suppose a manufacturer sells goods to the extent of £50,000 a year and makes a profit of £5,000. His fixed expenses would be probably £6,000. But now if he can increase his business and sell £100,000 his profits will be not merely £10,000, but they will be added to by the reduction in the fixed expenses on the second £50,000. His profits upon the £100,000, instead of being £10,000, will probably be £15,000; and the result of that is that he can afford to sell, as compared with his previous condition, his second £50,000, not only without profit but at a loss. That is what is happening. In America the manufacturers are making and building up their works, and when there is a boom, as there has been recently, the works are at once increased; and, so long as the home trade will take all the works make, that is a most profitable arrangement for the manufacturers, and no goods come to this country. But the moment the boom is over, if to-morrow, there was a depression, say, in the iron trade, there is not the slightest doubt—it has been stated publicly by the President of that tremendous Steel and Iron Corporation, and it is actually being done at this moment by the great German Trust—it is perfectly certain that quantities of iron will be put down in this country or the countries we are supplying at a price we cannot possibly contest. Remember that is the issue.

AN HON. MEMBER

So much the better.

MR. J. CHAMBERLAIN

The hon. Member who is in a different line of business has no objection whatever to see manufacturers ruined. He has no objection whatever, apparently; he says indeed—so much the better. I say this result will occur, that, inasmuch as no manufacturer here can possibly stand a loss of that description for many years together, his business will be ruined and the whole of the capital lost as well as the profit. It is not merely the loss of two or three years profit, but the whole of the capital goes into the scrap-heap. At all events, to my mind it is one of the most serious issues we have to deal with. Of one thing I am perfectly certain. In spite of the hon. Member and of any decision given by the country, if it is raised in the country now, if there should be depression in some of the greatest industries, and this result should follow, nothing will prevent the people of this country from immediately imposing a duty which shall defend against such unfair competition a great and staple industry. Nothing will prevent the people of this country from immediately imposing a duty which shall defend against such unfair competition a great and stable industry. I think I have, at all events, indicated the lines on which my mind is moving and the discussion which I wish to raise—and which I promise the hon. Member I will raise—before the constituencies.

*MR. LOUGH

The right hon. gentleman has told us that he is in favour of reciprocity and preferential treatment for the colonies. I think the right hon. Gentleman has been excessively candid, and that the House owes him a great debt of gratitude for the full statement he has given to us. The right hon. Gentleman gave us one or two definitions: which sounded very plausible, but only because we did not receive them in a very critical spirit. He asked what free trade was; but we are not talking of free trade, but of a free trade tariff, which is a very different thing. He told us that free trade was the free interchange of commodities at their natural price; but a free trade tariff is something quite different; it means a tariff for the purpose of revenue only, and not for the purpose of protection. We were all delighted to hear the speech of the noble Lord the Member for Greenwich. That speech was perfectly disastrous to the scheme of the right hon. Gentleman. The noble Lord said he hoped that for the next fifty years we would stick to the tariff this country had adopted—a tariff for the purpose of revenue only. For the first time in fifty years a leading Minister of the Crown, supported by the Prime Minister, has declared in favour of a tariff for the purpose of protection. That is a most momentous decision; and some protest ought to be made against it. The Colonial Secretary has been hurried into this decision by his desire to meet the wishes of the colonies. We all join in a spirit of that kind; and I do not think that my hon. friend the Member for Carnarvon Boroughs was very kindly treated by the noble Lord the Member for Greenwich when he referred to the feeling we all have about the Empire. We love it just as warmly as hon. Gentlemen opposite; and we might be allowed to carry on the discussion without being held up to contumely for the views we hold. I do not think the Colonial Secretary is treating his country very well in the manner in which he is carrying on the discussion. He said that Canada had asked for a preferential duty of a shilling on corn, and that we had not been able to make any reply to that application. That is a most unfair description. We have made a reply. We have taken off the shilling on corn to which Canada objected, and I suggest that that was a very friendly reply.

MR. J. CHAMBERLAIN

I do not think the matter is of the smallest importance; but at the Conference the Colonial Premiers said, "If you give us a drawback on this duty, we will discuss it with you further."

*MR. LOUGH

I am much obliged to the right hon. Gentleman; but I think he might in his reply have done much better for this country. We have taken off the shilling duty, and the right hon. Gentleman might have made a better answer than he did. We have taken off the shilling duty; and, to that extent, we have done something to meet Canada. This point exhibits the fallacy which underlies the scheme of the right hon. Gentleman. He told us that Canada gave us in 1898 a preference of 25 per cent.; but the noble Lord the Member for Greenwich made a reply to that. He reminded the House that Canada was not forgetful of her own interests, and that she received a great advantage from this country by making this concession. If the right hon. Gentleman was willing to represent the policy of this country in a good light, he would have put it differently. The object Canada had in view in giving us a preferential tariff was not to benefit us, but to sell her own produce. I find that during the last four years the exports from Canada of butter have increased 110 per cent., of cheese, 50 per cent., of meat, 20 per cent., of hams, 100 per cent., and of apples, 50 per cent. Therefore Canada has had a splendid return from this country for anything she has done in the way of giving fair treatment to our exports. The issue has been fairly stated by the Colonial Secretary. He claims that he will put on duties against Germany. The noble Lord the Member for Greenwich says, let us not get angry with Germany; let us expostulate with, Germany. I am in favour of the policy of the noble Lord; it is more consistent with the traditions of this country than the new fiscal policy of the right hon. Gentleman. I believe we have had this afternoon a more productive debate than we have had for many a long day. The candour of the Colonial Secretary is greatly to be praised. He admitted that his policy meant adopting preferential tariffs against foreign countries. Which is the first country we would strike? The United States. It is from that country that we receive the largest quantity of corn. The United States sends us twice as much food as any other country; and therefore, the first step will open a chasm between us and the United States—the other half of the Anglo-Saxon world. That will be the first of the fundamental follies this country will be led into if we follow this policy. The Prime Minister said that we are getting into a serious condition so far as our exports are concerned. He suggests that it has become difficult to carry on trade with civilised countries. A return recently issued shows that the export trade of this country with such nations is not diminishing. It is growing; and, therefore, there is not the slightest necessity for us to adopt a policy of this kind. The trade returns were never better. What, therefore, is the reason why the Government is going in for this wild campaign? The reason is political; and a word of protest ought to be uttered against it. I believe that, however speciously the Colonial Secretary may clothe his new doctrine, he will not be able to show the people of this country that it will be to their advantage to depart from the traditional policy of free trade.

MR. WINSTON CHURCHILL

The statement of the Colonial Secretary is one of momentous importance and absorbing interest; and I hope the House will not think me presumptuous if I take the earliest opportunity of saying that I heard it with profound regret. I have read attentively the history of the great Home Rule crisis of 1886; and it seems to me that much injury might have been saved the Liberal Party, if all those who viewed the Home Rule policy of Mr. Gladstone with distrust and suspicion had taken the very earliest opportunity after its inception, of protesting against it in the most emphatic manner. Instead of that, they allowed themselves to slip from point to point; and then, when there was no means of retreat, the Party found itself committed to a policy which for twenty years has hung round its neck like a millstone. But I cannot say the system of preferential tariffs which the Colonial Secretary has advocated this afternoon does or ought to inspire the Conservative Party with enthusiasm and still less the measures which are to carry it to success. It is obvious that we cannot discuss this matter now at great length. These are matters which must be dealt with in the prolonged course of what will be the greatest controversy in the history of our country. But apart altogether from the merits of the question there are two considerations which I would most earnestly submit to the Government and the House of Commons. The first is this: you cannot stop, and the Colonial Secretary will not be able to stop if he desires to, at the simple system of preferential tariffs. He will have to fight a fierce battle in which the manufacturers, fair traders, and agricultural protectionists will be his supporters, and it is perfectly evident that their interests will have to be consulted at every stage. The idea of giving a preference to the colonies in matters which we must in any case tax for revenue, has now been extended to a definite proposal for the taxation of foodstuffs, and although it is perfectly clear that this proposal of protective duties on food will please agriculturists, or, at any rate, will please the bulk of them, what about the working man? And thus you are compelled to take a step forward and include old-age pensions in this scheme. The colonies will be pleased, no doubt, and the working classes may be placated by the promise of old-age pensions. The cost must, therefore, principally fall on the manufacturing fair traders, who will have to pay more for labour, and who will, therefore, lose in neutral markets. They will insist on some tangible return, and the only one possible will be an elaborate system of bounties and duties. This move means a change, not only in historic English Parties, but in the conditions of our public life. The old Conservative Party, with its religious convictions and constitutional principles, will disappear, and a new Party will arise like perhaps the Republican Party of the United States of America—rich, materialist, and secular—whose opinions will turn on tariffs, and who will cause the lobbies to be crowded with the touts of protected industries. What is the cause of this change? Never was the wealth of the country greater, or the trade returns higher, or the loyalty of the colonies more pronounced. Is it that we are tired of these good days? There is no popular demand for this departure. I do not know what popular demand or popular movement the Colonial Secretary with his great popularity and persuasive manners may not be able to excite, but at the present moment there is no demand whatever, and not for the last 100 years has a more surprising departure been suggested.

MR. WILLIAM REDMOND

I merely rise to say that Ireland is the country which more than any other has been injured by free trade. It is perfectly true that the policy of free trade adopted by this country injured it out of all proportion to the other parts of the Empire, and therefore I find no fault with the remarks of the Colonial Secretary, which were historically accurate. I merely rose to say that I think the proper way to deal with Germany if she injures Canada is to refuse to join Germany in the way in which we joined her in the question of Venezuela. I think there will be but one opinion as to the conduct of the Colonial Secretary in raising this question at this time, and that is, that his action is not calculated in any way to strengthen the Government of which he is a Member. What object he can have in raising this question now it is impossible to say, unless it be to wreck his Party.

MR. HARWOOD (Bolton)

There are one or two facts in relation to the subject of this debate to which I desire to call the attention of the Prime Minister. In the first place, what is the reason for this change of policy? It is quite clear that the condition of the Empire has never been better. Has not the late war revealed a feeling between the colonies and the Empire far in excess of what anybody had imagined? Why, then, disturb that happy relationship? As to the question of trade, who is complaining? Who finds things wrong? The Prime Minister seems to have it in his mind that we are moving towards a difficulty that we are coming to an impasse, and that we must make a new departure. But what are these signs? In every direction our trade is extending, and if any theory was ever justified by results it was the theory of free trade. It has been said that in the North we have made a fetish of free trade. But had any worship answered so well or proved so successful and profitable as the worship of free trade? I do not care to argue the matter as one of abstract theory; I am prepared to defend it as a practical fact. The Under Secretary of the Board of Trade has spoken of our supremacy at the beginning of last century and has asserted that we have not the same supremacy now. But it is not merely a matter of supremacy; it is a matter of the volume of business done, that we regard. I remember the condition of my own town of Bolton at the beginning of our supremacy. For Bolton it was a time of very great distress. That town was then one-third the size it is now. Half the houses were empty, and the Government sent down a Commission to consider how best to cope with this distress. I have heard from my own people who were not among the poorest in those days. Even people of their class did not get white bread more than once or twice a week. Those facts have burned themselves into the minds of the people of the North. The Prime Minister and the Colonial Secretary seemed to be haunted by the question of free trade. The Prime Minister gave us a definition of free trade as a free interchange of commodities at natural prices. We define free trade as being the free reception of all goods coming to our shores. It is all very well to have free trade with other people if they give you free trade in return, but the Prime Minister says we have not that interchange, and therefore we may question the wisdom of the policy. But we will accept a narrower definition of free trade. We are so convinced of the wisdom of free trade for ourselves that we will adhere to it if nobody else gives it. We are prepared to argue the question on the ground that free trade is the free reception of commodities from all countries at their natural price, excepting what charges may be necessary for revenue purposes. It is said that this country is made the dumping ground. All the better. I do not object to the baker and the grocer making my house the dumping ground for their goods; I am extremely glad to have them. It must be borne in mind in these discussions that the case of England cannot be argued on the analogy of the United States or Germany. The United States is a cosmos in itself. We in the North of England are convinced that if the United States had adopted the policy of free trade we should have had a very hard time of it. Great as her prosperity has been it would have been ten times greater had she had a sound fiscal system. Germany has secured her advantage by blending a number of States which previously had separate tariffs. The idea that we should shut out others because they shut us out is nonsense. This is not an abstract matter, and we can surely ask what is the matter. Is our business wrong? The Chancellor of the Exchequer and his predecessor had been astounded at the case with which they could raise revenue. Is our Empire wrong? Everybody acknowledges that never was it in a more successful condition than now. The Prime Minister may appreciate an historical illustration. Why did Athens fall? Because they mixed up fiscal tariffs with political motives. Why did the Empire of Rome break in pieces? For the very same reason. Why is the colonial empire of France a failure? Because of the same mixing up of fiscal and political theories. We do not want to be passionate, but if ever there has been a message to rouse our blood and make us fight this is one. We feel that not only is the welfare and the bread of our people concerned, not only the success of our trade, but also the happy brotherly love of the Empire, which will be displaced by a condition which may break the Empire in pieces.

MR. PEMBERTON (Sunderland)

The Prime Minister has told us that this matter was really only to be discussed in the future, but after the speech of the Colonial Secretary it is impossible not to feel that this programme—if it is a programme—is the programme of the Leaders of the Unionist Party now. Although the Colonial Secretary said it was not necessary to settle this at once, he also said you could not keep the colonies waiting long in a state of uncertainty, and I do not think those two remarks are quite consistent. The conclusion one must come to is that if it is necessary for the future of the Empire, and the closer union of the different parts of the Empire, to have some kind of preferential tariffs, on the Colonial Secretary's own showing that ought to be settled at once, and the issue put before the country. I do not think it possible at present to express any definite opinion on the value of the programme, but I do not wish it to be supposed that all members of the Conservative and Unionist Party, because they have been members of that Party in the past, necessarily approve of this programme. If we are to approach this question in a proper way we must disassociate ourselves from that implication, and many others on this side hold the same view. What the future may bring forth, whether it will justify the adoption of this policy for which there is plenty of argument, I do not know, and at present we do not express any opinion upon it.