RECIPROCITY WITH CANADA. (Hansard, 27 May 1892)

THE EARL OF DUNRAVEN

In making the Motion which I shall presently have the honour to make, it appears to me very desirable that this House of Parliament should have accurate and official information as to a Resolution which was passed not long ago by the Canadian Parliament. The Resolution, as I understand it, whatever opinion may be held as to its terms and principles, is at least a very significant fact. A distinct proposition having reference to reciprocal treatment within the Empire, or at any rate a distinct intimation that she would be ready to consider that proposition, has been made by one of our self-governing colonies. And, so far as I know, my Lords, this is the first time that the question of reciprocity has been put forward in what may be deemed a practical shape. I am very sure, my Lords, that the House will agree with me that the status and condition at which the colonies, having responsible self-government, have arrived is such that any utterances they may make on matters of this kind affecting themselves, or on matters affecting our domestic Imperial policy, ought to be, and will be, received by Parliament, and by this House, with the attention that is due to them. My Lords, I should like to make a few remarks upon the purely commercial and practical aspect of the case. I was very much impressed by the words that fell from the Prime Minister on the last occasion when I had the honour of bringing this general topic before the House. The Prime Minister then said that this great question of preferential treatment or some approach to commercial union within the Empire was one that appeared to lend itself rather to rhetoric than to any practical suggestions. I myself, I admit at once, have got no very practical suggestion to make to-night; I was under the impression—I suppose I should say under the delusion—that last Session I made a very practical suggestion in asking that the colonies might be invited to confer with us on this subject. But, my Lords, a practical suggestion has been made. So far as I under- 14 stand the Resolution that was passed by the Canadian Legislature, they express their willingness to give us a distinct preference in their markets, if we, in our turn, are ready to give an equal preference to their goods in our markets. Now, my Lords, to understand how that would affect us it is necessary to consider what is the nature of our trade with that colony? Practically our exports are entirely in manufactures. We export textiles, cotton, woollen, and silk goods, and hemp and flax, and so on; we export iron in considerable quantities; and hardware, glass, china, and all goods of that kind, which are generally called dry goods; and haberdashery, and so on—in fact, we export manufactured articles of nearly every description. Articles of the same description are exported to Canada by foreign countries, and specially by the United States; in some of those goods the exports from the United States exceed our exports; in other classes of goods our exports exceed those of the United States. Speaking broadly, they are pretty evenly balanced, and there is no question but that our manufacturers are in very fierce competition with the United States in supplying the Canadian markets. It is perfectly obvious then, my Lords, that a distinct preference, such as Canada has suggested to be given to our goods, would be an enormous advantage to us; it would cause a considerable increase in our export trade to Canada; it would create in consequence a considerable expansion of our manufacturing industries; and it would also in consequence benefit the carrying trade. Then there is the other side of the case to be considered: What have we got to give in return? The Canadian suggestion is that if they give us an advantage of ten per cent. we are to give them an equivalent percentage say of ten per cent. What do we obtain from Canada? Some, what may be termed, semi-manufactured goods, such as timber and leather, but principally raw produce in food articles. We import meat, cattle, wheat, grain of all kinds, cheese, eggs, fish and meat cured, and provisions generally,—and, my Lords, we have no duties whatever upon Canadian raw produce; 15 and therefore in order to give them the quid pro quo, which they very naturally require, it would be necessary for us to place duties upon these food imports. The crucial question is, what effect upon us would be caused by placing duties upon food products? I have no doubt that the very idea would cause a kind of cold shudder to run through the nervous system of some of your Lordships. I should be told that I am ready to tax the food of the people, and that the idea of taxing raw produce when we are in such difficulties in competing with foreign countries in manufactured articles is perfect madness. But, my Lords, would the effects be so very disastrous? As a matter of fact, I think even a very cursory examination would show that they would not. In theory, no doubt, if you place import duties on bread stuffs, the price of bread ought to rise; but in practice the price of bread does not rise. By observing what occurs in European countries, and in the fluctuation in the price of corn in this country, the truth, which cannot be ignored, is that the selling price of the manufactured article, bread, does not rise in proportion—does not generally rise at all—in consequence of an increase in the price of the raw product, wheat. In 1890 we imported about sixty-seven and a half million hundredweights of foreign wheat, and in the same year we used about forty-one million hundredweights of home-grown wheat, and about fifteen million hundredweights of British-grown wheat; in round numbers, we used about fifty-six million hundredweights of British, as against sixty-seven million hundredweights of foreign wheat. Now assuming that an ad valorem duty, equivalent to ten per cent., was placed upon foreign wheat, and assuming that the price of bread did rise to the full value of that duty, the difference would be something less than a farthing in the price of a quartern loaf. I do not, my Lords, wish in the least to undervalue an increase even of a fraction of a farthing in the price of bread; but the question is whether even that increase would occur? I do not for one moment believe it would. The duties on wheat were raised enormously in France to an extent amounting to seventy or seventy 16 five per cent.; but no appreciable difference whatever was caused in the retail price of bread. And the same thing occurred in Germany. In this country, my Lords, you will find that the wholesale price of corn has increased, at one period as against another, to an extent more than equal to a ten, fifteen or twenty per cent. duty on the whole of the foreign imported wheat that comes into this country, and that increase in the wholesale price of corn has made absolutely no difference whatever in the retail price of the quartern loaf. My Lords, these are facts, and whatever our theories may be, or however much they may conflict with theories, they are facts which ought to be, and must be, taken into consideration in considering this question. But, my Lords, I wish to point out further that the assumptions I have made are really absurd; they rest upon no solid foundation whatever; in our case, even in theory, it is perfectly impossible that any moderate duty on foreign wheat could have any effect whatever upon the price of bread. In the first place a moderate duty, though it could not affect the price of bread, would have a considerable effect in encouraging British production, that is to say, in encouraging the production of wheat in Canada, in Australia, and in India; the area of production would be increased; more wheat would be grown; and that in itself must infallibly be of great advantage to us as large importers of wheat. Then, my Lords, when an import duty is imposed, it is obvious that somebody has to pay for it. The question is who does pay for it? The theory generally held in this country is that the importer pays the duty; the theory held in most other countries, and especially in the United States, is that the exporter pays the duty. They look upon the duty as a tax which the exporter pays to come into their markets. The real truth of the matter is that the question of whether the importer or the exporter pays the duty, or what proportion of it they relatively pay, is determined by the State of the market, and the relative necessity to sell or to buy. If the buyer be exceedingly anxious to buy, and the seller not particularly anxious to sell, then obviously 17 the buyer, the importer, will pay the whole or a large part of the duty; but if, on the other hand, the necessity for the buyer to buy is not so urgent as the necessity of the seller to sell, then the producer, the exporter, will pay the whole or a large part of the duty. Now, my Lords, in this case there can be no doubt that the foreign producer would pay any moderate duty that was put upon his bread, and for this reason: that our area of production is limitless; we in England, in British India, in Canada, and in Australia can produce all the wheat that we require so abundantly and so cheaply, that there is not the faintest danger in the world that a duty on foreign wheat can make any difference whatever to us. It is a well-known mercantile fact that the price of the cheapest parcel of goods sets the whole market value of a commodity, and there can be no doubt that the competition between Indian, Australian, Canadian, and home grown wheat would keep down the market price, and would set the market value of all the imported wheat that came into the country. In such a case the foreign wheat producers would pay the whole of any moderate import duty. It would be absolute ruin to the United States, and the great industries in Russia to be excluded from our market, and to avoid being excluded they would have to compete with Indian, Australian, and Canadian wheat. To come in at all they would have to pay a duty, and, sooner than be excluded, they would pay anything in the nature of a moderate import duty that was placed upon foreign grain. My Lords, the effect of discrimination, as it appears to me, would be this: the revenue would gain to the extent of the duty; the foreigners would pay that duty—which appears to me a most excellent way of raising the Revenue—the area of wheat growing would be increased which would be an immense advantage to us; the industry of wheat growing would gradually tend to transfer itself from foreign soil to British soil. And the advantage that that would be to us is self-evident, if I remind your Lordships that as a customer, as a purchaser of our goods, one Canadian is worth three citizens of the United States, and is worth twenty-three Russians; and 18 one Australian is worth to us twelve citizens of the United States, and about ninety Russians. My Lords, I have selected wheat to speak about because it is the most important article both in quality and quantity of the food products that we import, and because it is the article about which controversy generally rages most hotly. But if your Lordships will look into the matter you will find that the same arguments that I have made use of in endeavouring to show that a discriminating duty in favour of British grown wheat as against foreign grown wheat could not possibly have the effect of enhancing the price of bread at home will equally apply to all other articles of food that we import. I am not at all afraid of the accusation of wishing to raise the price of food to the people. I know very well that the line of argument I have endeavoured to sketch out can be sustained in detail, and I am not at all afraid of meeting generalities of that kind with arguments which are founded upon fact and truth. After all, my Lords, this policy of discriminating in favour of our best customers is only applying to public affairs the principle which is instinctively and intuitively followed by every individual who is engaged in trade in this country; there is not anyone engaged in trade, from the greatest commercial company to the smallest retail shopkeeper, who does not recognise the difference between a good and a bad customer, who is not anxious to give good terms to the good customer, and who is not ready to give advantages to a customer who in his turn will give advantages to him. Why that common - sense view of the matter, which is thoroughly understood in private life, should not be better understood in public life, and in national affairs, is a matter which, I confess, puzzles me very much. I should apologise to your Lordships for taking up this amount of the attention of the House with a subject of this kind because really it is almost self-evident; but your Lordships must remember the extraordinary amount of prejudice and ignorance which prevails throughout the country on this point, and how very easy it is even now in these times of education to excite the prejudice 19 and the passions of the people by cries which have no foundation in fact about a little loaf, and a big loaf of bread. How long it will take before the working people of this country understand that a big loaf means to them occupation, employment, and good trade, I do not know; or how long it will take them to understand that putting moderate duties on foreign food products, while of course allowing all the food products of the Empire to come into our ports free, means giving them employment and better trade, and does not mean dearer bread I do not know either; nor do I pretend to guess how long the gigantic ignorance that prevails on this subject will continue to reflect itself in the intelligence of Members of Parliament. But this I do know: that sooner or later—and when it does come it will be a very good day for this country—the people of this country will begin to understand that the true interests of our industrial population lie in the very common sense policy of encouraging trade between the mother country and the colonies, and between the colonies and the mother country. They will come to understand also that the only way in which that can be done is by some such proposition as that which has been put forward by Canada, namely, that the colonies should give a distinct preference to our manufactured goods, and that we should give a distinct equivalent to their raw produce. The people of this country will come to understand also what it would not be difficult to make plain to them, that in so doing, for the reasons I have endeavoured to put before your Lordships, there is not the remotest chance in the world that the effect would be to increase the cost of food. Now, my Lords, that is all I have to say on the practical aspect of the case. I look upon it as very important; but I admit at once, that that is not the main reason why I have always advocated reciprocity between the mother country and the colonies. I have always advocated it for political reasons. There are but two policies, two ideas, possible before us, looked upon as an Empire composed of communities having practically perfect freedom of control of their own affairs: the one is the policy of doing 20 nothing, the policy of isolation, which if pursued must, and will infallibly result in the colonies drifting further and further away from our flag, in their desiring, and succeeding in giving preferential treatment to foreign labour and foreign goods as against British labour and British goods—a policy that must inevitably end in breaking up the British Empire, because there are no ties of blood, race, religion, affection, loyalty, or anything else that can long stand up against the disrupting force of commercial hostility and commercial jealousy. It is the question of trade and trade only that will bind together or will break asunder the British Empire. Well, my Lords, what can be done? I do not say that any statesmanship may avail to keep the British Empire together for ever—there is no use considering abstract questions of that kind, or endeavouring to partly discount the future; but at least there is one thing we could try—there is the alternative policy, a policy founded upon the true appreciation of the inestimable political advantages and benefits of Empire and union, a policy sustained also by the belief that it is to the advantage of every part of the Empire, and of the Empire, as a whole, that union should be maintained, a policy which believes that political union can only be brought about, can only be made lasting, by commercial union, by a community of trading interests; and a policy also which holds that even if it be necessary to make some immediate sacrifice to obtain so great a political end, that the end is worth it, and that the sacrifice ought to be made. My Lords, I do not believe that any sacrifice on our part is necessary; but even if the sacrifice were necessary, I should still uphold that policy, because I see in it, the only possibility of any approach towards free exchange, and I see that it is the one and only means whereby the component parts of the Empire may be kept together, and whereby the cement of sentiment that now binds us can be hardened and solidified sufficiently to withstand the fretting and wasting effects of time. My Lords, how can this question be in doubt? If you take a survey of our 21 commercial position we see every nation of the civilised world arranged in arms against us: universal hostility, every Power trying by hostile tariffs, and by every means, to exclude our products from their markets, and to get the better of us in neutral markets; you see every temptation offered to our colonies to treat with the foreigner rather than with us; you see every attempt by means of bounties and by every means to harass and distress colonial trades. And in face of this universal hostility, what attempt do we make to withstand it? Do we stand shoulder to shoulder and face to face to meet it with a united front? Not at all, we do absolutely nothing; we allow the forces of disintegration, which are working against our Imperial unity, to work on unimpeded, without making any effort to check them. My Lords, I dare say in making these remarks I shall be, as usual, accused of protection. It is a very dreadful accusation no doubt, but I do not suppose it will entirely undermine and destroy my constitution. As a matter of fact, I would like to take this opportunity of denying it, because I have no leaning whatever towards protection; on the contary I am a very strong free-trader, only I cannot get free trade, and I never shall get it. Free trade, everybody knows and admits, would be an immense advantage to the whole world, and a great advantage, as we believe, to us; but the unfortunate part of it is that every other nation believes it would be a great advantage to us, and, so long as they think that, we shall not get free trade. It is a very beautiful vision, but it is nothing more, and it becomes more and more attenuated every day; and if, in stretching out our hands to this dream, we are to lose substantial realities while they are within our grasp, I think we shall hardly be acting like common-sense and practical men. It is absurd, my Lords, to stigmatise as protection a system of mere imposition of duties quite irrespective of the object of their imposition. It is ridiculous to say that duties for retaliation, for instance, are protection. Retaliation may be good or bad; I am not going to discuss that matter. I observe that Mr. 22 Morley devoted a large portion of a long speech to arguing what an iniquitous system it was; but the instance be selected to prove his theory, namely, that of France, was not a very happily chosen one; for, if there is one thing which is absolutely certain it is that, if this country were, rightly or wrongly, to go into a war of tariffs with France, we must infallibly be the winners, because, broadly speaking, we import into France articles of the character of necessaries, and France sends to us articles of the character of luxuries; and when two parties exchange, the one necessaries and the other luxuries, it is obvious which must come out the best in the event of a war of tariffs. However, my Lords, I do not wish to say anything on the subject of retaliation, except to point out that the possession of a bargaining power, the potential use of duties, the power of being able to say, I will impose duties if such and such takes place or does not take place—the carrying in the hand the hilt of the sword, and the showing, and, if necessary, the using of a weapon cannot, and ought not by any contortion of language, to be called protection. Neither, I maintain, can duties for Revenue be called protection, nor duties imposed for a definite political purpose, such as commercial union within the British Empire. Last Session, my Lords, I asked that the colonies might be invited to confer with us on this great subject. It is a subject which was discussed very freely and very wisely, as I thought, at the Colonial Conference; but, as the matter was not definitely before that Conference, the discussion could not result in anything, and was not in any way official. That request was refused on the ground that we had nothing practical to set before the colonies, and that they ought not to be invited to come to a Conference unless we were prepared with some definite proposition to make. I do not renew that request, because I have no doubt that the reasons that influenced the Prime Minister then exist still; I do not suppose we have any definite proposition to place before them. But, my Lords, unless this question is entered into in some way, how is it ever to 23 arrive at a condition in which any definite proposition can be made? If the colonies are to wait until we are ready to make a definite proposition to them, and if we are to wait till they can make a definite proposition to us—if, in fact, there is to be no authoritative discussion; if a question which is so difficult and complicated is not to be discussed and ventilated by accredited persons, it appears to me that, by the time we are in a position to make a definite proposition, there will be no longer any British Empire in existence to make a definite proposition about. The question is exceedingly difficult. It is impossible even to understand the true nature and value of our colonial trade, because it is impossible to distinguish what are re-exportations and re-importations; there are some articles of raw produce which, so far as I know, do not grow in the colonies to any great extent. How are we to deal with articles coming from the colonies which they would wish us not to tax? How are we to know from what manufactured goods coming from us they would be willing to take off duties? How is the matter ever to be brought into a condition in which the people of this country and of the Empire can grasp it and understand it, unless a crucial inquiry by some means or other is made into it? My Lords, our commercial treaties also are involved; the whole bearing of our commercial treaties upon us and upon the Empire as a whole, and every individual colony, is implicated in this question. How we are to ascertain what colonial opinion on the subject is, and how they are ever to ascertain what the opinion of this country is, I do not understand unless inquiry is to be in some way made. My Lords, a great, but not, I hope, fatal mistake was made by weak statesmen in former days when they neglected to introduce the principle of reciprocal treatment where Constitutions were granted to the great self-governing colonies. It is not perhaps too late to remedy that mistake. But one thing is absolutely certain: that, if no steps are taken in the matter, if the whole question is allowed to go by default, the time will soon come when it will be too late; for if nothing is done to bring about commercial unity—commercial 24 community of interests within the Empire—it will not be long before the great self-governing colonies are tempted to discriminate in favour of the foreigner as against us and as against each other; and I do not think it requires a prophet to say what the speedy effect of such a policy as that must be. My Lords, I do not again ask for a Conference; but nothing in the world would give me so much pleasure as to hear from Her Majesty's Government the expression of a hope that in some way or other, by whatever means they thought most suited to the purpose, some measures would betaken for ascertaining, so far as possible, what views the colonies hold on this great Imperial question, and also to ascertain, so far as can be done by inquiry, what effect would be produced upon our manufacturing industries, and upon our trade with foreign countries, if a proposition such as is contained in the Resolution passed by the Canadian Parliament were in its principle extended to the whole Empire. My Lords, I beg to move for a copy of the Motion agreed to in the House of Commons of the Dominion of Canada on the 25th April 1892, referring to preferential trade with the United Kingdom. Moved, "That there be laid before the House Copy of the Motion agreed to in the House of Commons of the Dominion of Canada on the 25th day of April 1892, referring to preferential trade with the United Kingdom."—(The Earl of Dunraven.)