HL Deb 20 May 1908 vol 189 cc211-57

rose "to call attention to recent changes which have been made in the tariffs of the self-governing Colonies for promoting their economic development and the extension of their trade relations with the United Kingdom and foreign countries, and the desirability of increasing the productive power of the Mother Country and the Empire as a whole by the arrangement of reciprocal preferences; and to move for Papers."

The noble Duke said: My Lords, in previous debates on this subject which I have ventured to initiate in your Lordship's House, noble Lords have spoken with great moderation, and I desire on the present occasion, in again bringing the matter to your notice, to approach the question in that spirit. I think the present is not an inopportune moment for this country once again to review the position in which we stand towards our Colonies and colonial trade. It is a subject in which the people of the country take a deep interest; it is a subject upon which Colonial Ministers themselves have expressed their opinion; it is a subject upon which the colonists hold strong views; it is a subject, therefore, which can never be totally ignored by the Government of the day. Moreover, some time has elapsed since the Colonial Conference, and we are at greater liberty to discuss the views as then expressed of the Colonial Ministers and the policy of His Majesty's Government. Perhaps the most important consideration of all is that during the last year considerable alterations have been made in the tariffs of some of the self-governing Colonies—I refer to Canada, New Zealand and Australia—and, in particular, an important trade convention between Canada and France has, to some extent, marked a new departure in the financial and political policy of the Dominion. These considerations, taken together in an accumulated form, justify once more a review of the position in regard to the economic development and extension of our trade.

Let me consider quite briefly the question of preference. What is it that we seek to obtain from the results of preference? It is an increase of the volume of trade within the Empire, with its increase of profit and consequent greater capacity of production among the communities within the Empire. A simple illustration will bear out my point. The excess of imports over exports amounts to over £120,000,000 per annum. The needs of the Empire are not supplied by it to the extent of that figure. When we claim that preference has been beneficial we desire to point out that the volume of Empire trade has been increasing, and that commodities have been exchanged within it which, without the stimulating influence of preference, might have been furnished from countries outside. Let me draw attention to the result of the preference which Canada has given to us. The imports of Canada from Great Britain, which noble Lords will remember had fallen between 1890 and 1897 when there was no preference, have gradually increased under the stimulus of preference till to-day these imports are nearly double what they were in 1890. Your Lordships may remember what the present Chancellor of the Exchequer said at the Colonial Conference, when he expressed his view upon the result of the preference which Canada had given to us. He said— Let me here express for the Board of Trade, whose duty it is to watch carefully all that affects our trade in all parts of the world, our appreciation of the enormous advantages conferred upon the British manufacturer by the preference given to him in the Colonial market by recent tariff adjustments. The Canadian preferential tariff has produced a marked effect on our export trade to Canada. It is true that it seems to have benefited Canada even to a larger extent than it has profited us, for I observe from our trade returns that our purchases from the Canadian producer have increased and are still increasing by leaps and bounds. … I attribute the great improvement in the trade between Canada and this country very largely to the wise policy of reducing the duty on goods imported from the mother country, which Sir Wilfrid Laurier initiated in 1897. It has undoubtedly stimulated trade between the two countries.


Hear, hear.


I am very glad to hear the noble Earl the Leader of noble Lords opposite say "Hear, hear," because I remember that when the subject of Colonial preference was discussed a year or two ago noble Lords opposite were at great pains to show that the preference which Canada had granted to us was of very little value. Indeed, some noble Lords asserted that it was of no value at all; and it is a great satisfaction to find that events have proved that the views held on this side of the House were right and that those expressed by noble Lords on the other side of the House were wrong.

I have dealt at some length with the preference that Canada has given to this country, and for this reason, that of the vast trade between this country and Canada, representing some £12,000,000 or £13,000,000 per annum, 75 per cent. goes direct in wages into the pockets of the working classes of this country. It is, furthermore, estimated that the increased trade of this country, as the result of Canadian preference, would have been sufficient to employ all these years a community of the size of Brighton, or, I may say, equal in population to Dundee. I think it is admitted on both sides of the House that the preference which Canada has given to us has been of benefit, and if any noble Lord wishes to examine the matter at greater length he will find it set forth in the Report of Mr. Grigg, which was laid on the Table of your Lordships' House at the beginning of this year.

I desire to take your Lordships a step further and remind you of the position of New Zealand and the preference which she has granted to this country and to the sister Colonies. As noble Lords are aware, British Possessions possess three-quarters of the trade of New Zealand. In pointing out to your Lordships the advantages of the New Zealand tariff of 1903 I do not think I can do better than quote the financial results which Mr. Jeffery admits in his Report. On page 11 of that Report he gives a summary in which he shows that British trade has increased at a far greater rate than foreign frade with New Zealand; and the conclusions at which he arrives are as follows— The figures as a whole suggest that the effect of the preferential agreement has been to divert to the United Kingdom and British Possessions a portion of the trade formerly held by foreign countries in commodities affected by the preference, and in particular in the last year the United Kingdom and British Possessions were enabled to secure the whole of the increase in the imports of these commodities—about 22 per cent. of the total imports into New Zealand. Again, on page 14, he says— In spite, however, of constant American rivalry and continued German efforts, British merchants and manufacturers dominate the New Zealand markets. Therefore it will be seen that the New Zealand preference has been of very great benefit to Imperial trade. Formerly New Zealand gave a preference to this country by increasing the duties against the foreigner without lowering them against British goods, but in the revision of her tariffs last year she gave a slight reduction of the duties on goods coming from the United Kingdom; and I think we may consequently look forward to a further increase of trade between the Colony and the Mother Country.

Owing to the South African War, and incidents connected with the war, it has not yet been possible to form any just estimate of the results of the preference granted by South Africa; and so far as I am aware there are no Parliamentary Papers on which we can form any accurate estimate. In the case of Australia, it was only last year that the Colony in her new tariff arrangement gave this country a preference. Under the old order of things the foreign trade of Australia had grown in greater proportionate rate than the British trade, and it is to be hoped that that unfortunate state of things will improve as a result of the preference which we now possess. I need not dwell upon the effect of inter-Colonial trade itself, that is to say, the preference which one Colony has given to another. The result of that arrangement has been highly beneficial to Empire trade, and any noble Lord who has any doubt on that matter need only refer to the proceedings at the Colonial Conference where he will find that the then Undersecretary of State for the Colonies asserted that the results of inter-Colonial trade had been highly beneficial to the Empire.

I have ventured to remind you this afternoon of the benefit of the preference which Canada and New Zealand have given to us, and also of the fact that trade between the Colonies themselves has progressed under that system. May I, quite briefly, dwell on the Imperial problem which lies before us and its possible solution? It has been suggested that a Customs union might be devised. This is impracticable, because it involves a uniform tariff, an Imperial Exchequer, and the assimilation of the internal systems of taxation of the various parts of the Empire. There is another view which appeals to some—that each constituent State, while arranging its tariff to suit its own need, might admit the commodities of every other State of the Empire duty free. I think this is equally impracticable, because the Colonies would not have sufficient revenue to discharge the obligations and requirements of their respective Governments. There is a third solution. In my view the foundation stone of the ultimate aim of free trade within the Empire is to be found in a system of preference, by which each State should arrange its tariff from the point of view of its own internal necessities; and on the basis of this tariff should give such lower rates of duty, or exemption from duty, as may be practicable to other parts of the Empire with the direct object of stimulating internal Imperial trade. Is it possible for us in any way to participate in such a policy? I think it must be apparent that the revenue needed by this country for schemes of social reform, to which noble Lords opposite are committed, and the many other liabilities connected with the administration of government, to which I need not allude, can no longer be raised on the basis of an increase of direct taxation. The probability of duties having to be imposed for the purposes of revenue is, therefore, a probability to which many noble Lords are alive and to which few, indeed, demur. Moreover, as has often been pointed out by the noble Marquess the Leader of noble Lords on this side of the House, in negotiations for commercial treaties this country is seriously handicapped by having nothing to offer in return for what foreign countries may offer to us. I do not think that those views, put forward by the noble Marquess with that clearness and exactness of expression of which he is such a formidable exponent, have lost their weight or escaped the recollection of noble Lords in this House. The conclusion, therefore, to which we are forced is that, either for the sake of revenue or in order to strengthen our hands in foreign negotiations, duties will have to be imposed which will be subject to differentiation between the Colonies and foreign countries. From whatever point of view you approach this great problem, whatever economic view you may hold and desire to support, the possibility of granting our Colonies a trade preference must be ever present to the consideration of any British Cabinet, and judging from the opinion of the Colonial Ministers, the colonists themselves, and the vast volume of growing opinion in this country, it is a consideration which no British Government can afford to ignore. As is well known, the Unionist Party have no intention of ignoring it. We are prepared to wait our time. But facts are presented to our notice which make us believe that the present condition of affairs may be reversed, and the foreign trade of our Colonies developed to the detriment of Imperial trade during the tenure of office of noble Lords opposite, and that this might retard, and possibly prevent, future Imperial co-operation and Imperial trade reciprocity.

The present Government came into power pledged to support the principle of free imports, and to decline in any way to consider Imperial reciprocity. That policy found its full and true expression at the Colonial Conference last year, when His Majesty's Ministers declined even to consider any attempt to form economic arrangements within the Empire. The Canadian Ministers, therefore, having conclusive proof that further discussion was of no use, and no doubt with the platform oratory of the then Undersecretary of State for the Colonies still ringing in their ears, proceeded to Paris and entered into a trade Convention with France, How does this tariff between Canada and France affect Great Britain and her trade? In the first place, the intermediate tariff granted by Canada to France reduced the advantages we had over foreign countries in the trade in those articles of commerce in which we had a preference to the extent of the difference between the intermediate and the general tariff; and, in the second place, the basis of the intermediate tariff itself has been departed from. Canada has lowered her duties on certain commodities, making them almost equivalent to the preferential tariff which we now enjoy. The list of these commodities is given in Schedule C. of the Convention, and is set forth in the Parliamentary Paper which noble Lords opposite know very well indeed.

I would like to call the special attention of the Secretary of State for the Colonies to Article XI. of the Convention—the article dealing with favoured-nation treatment. As a result of that clanse, I understand that the advantages of the intermediate tariff and the additional advantages set forth in Schedule C. are extended to all countries entitled to favoured-nation treatment at the hands of the United Kingdom under treaties to which Canada is a party. What will be the effect of this treaty upon this country? I will give your Lordships one simple illustration. Among the countries entitled to most-favoured-nation treatment are Japan and Switzerland, formidable competitors with us in certain classes of commodities which we and they send to Canada. Take, for example, the silk trade. In 1906, Japan and Switzerland each sent over half a million dollars worth of silk to Canada; Great Britain sent one and a half million dollars worth; of lace and embroidery Switzerland sent in 1906 over half a million dollars worth to Canada; the share Great Britain sent was about one million dollars worth. I understand that to-day, as a result of Clause XL of the Convention between Canada and France, the advantages of the preference which we have enjoyed are no longer apparent, because the preference has been reduced to as low a figure as 2½ per cent. Our silk trade with Canada has been a growing trade, upon which we had prided ourselves that we were beating the foreigner "hand over fist." The bright prospects which we had in store have, however, now been removed. I venture to think that it will be small satisfaction to the manufacturers and artisans of Spitalfields, Macclesfield, and Nottingham to know that although they may lose their trade with Canada, all is really well because when they reach the age of seventy they will be remembered by a munificent Liberal Administration.

May I be allowed to take your Lordships one step further? In making this Convention with France the Canadian Government naturally expect to reap something in return, but in doing so they have given advantages to a number of countries without getting any in return. Our minds naturally turn to Germany. Under the additional advantages set forth in Schedule C, Germany will have an advantage over trade from Great Britain with Canada to an extent which I hardly like to contemplate. The effect upon our trade in this country and the effect upon Imperial trade is so obvious that I do not think I need labour the point further; and all this may happen in the near future when the taxpayer of this country may be asked to bear further burdens in order to maintain armaments against a foreign Power to whom you may shortly be going to offer the fruits of your Imperial trade and commerce. At the Colonial Conference Dr. Jameson uttered these warning words— When once you begin to make treaties outside the Empire there is no saying how far you may go. When you once get commercial sympathies, you generally find political sympathies follow. And this observation brings me to yet one more consideration. Once it is clear that Canada can offer exceptional trade advantages there is no earthly reason why her example should not be followed by New Zealand, South Africa, and Australia. We may be in the position of seeing our other Colonies making trade Conventions with the European nations, and the result will be that their foreign trade will develop at the expense of Imperial trade, and the very foundation upon which Imperial reciprocity could have been built up will have been impaired, and the object of Imperial statecraft will be frustrated certainly for a generation, perhaps, indeed, for all time. It is with these considerations in my mind that I think His Majesty's Ministers deserve to have their actions carefully scrutinised and examined. Did His Majesty's Government make any representations to Canada pointing out the disadvantages that would ensue to Imperial trade if the Convention were made? Did they hold out a single finger to dissuade the Canadian Ministers from carrying out their intention? In the absence of information from His Majesty's Government, we are forced to the conclusion that it was a matter of very little concern to His Majesty's Government that Canada should enter into a trade Convention with France, thereby diverting Imperial trade towards a foreign channel.

At the time the Convention was drawn up and ratified in Paris the British representative there was Sir Francis Bertie. Did His Majesty's Ministers, through their representative, point out to Canada that the result of this Convention would be to give favoured-nation treatment to twenty foreign countries? If they did point it out, what was the reply of the Canadian Ministers? And if His Majesty's Ministers did not point it out, why did they not do so? In all this we are considerably in the dark, and I ask the noble Earl whether the House may not be furnished with fuller Parliamentary Papers. I am emboldened to do so because I understand that most important despatches have passed between Sir Edward Grey and the Canadian Minister, and that these despatches have been the subject of comment in the Canadian Parliament. They have been quoted there, and consequently I presume many of them have been already laid on the Table of the Dominion Parliament. I have not so much experience of this House as some noble Lords, but it does seem to me to be strange that in a grave matter of this kind, involving a departure from previous principle, the despatches were laid upon the Table of the Dominion Parliament before being laid upon the Table of the Imperial Parliament. I understand that these despatches have passed between Sir Edward Grey and the Minister for Marine and Fisheries. What was Lord Elgin doing? He was the Colonial Minister. He was at the Colonial Office to protect Colonial interests. I suppose he was concerned in divesting himself of the responsibility of governing the Orange River Colony. What was the noble Earl the Leader of the House doing? He was, no doubt, busy framing Education Bills and conducting the business of your Lordships' House. What was the noble and learned Lord on the Woolsack doing? His opinion on international law is paramount. Did he tell the Cabinet that the result of this Convention would be to grant favoured-nation treatment to twenty other countries? Did he explain to the Cabinet the exact effect of this Convention? Indeed, we do not know whether the Cabinet itself discussed this question. Is it possible for Canada, if she wishes to do so, to increase the preference she has already given us, or is she bound by this treaty? We can only assume that this matter was never laid before the Cabinet. If it was laid before the Cabinet they displayed very little concern in it, and so far as they displayed little concern in it they were unmindful of those vast responsibilities committed to their charge.

One cannot help comparing the attitude of His Majesty's Ministers in this grave matter with the policy which the late Government would have pursued. I feel sure that if Mr. Chamberlain had been at the Colonial Office he would have declared that this policy of forcing Canada to make a foreign trade Convention was highly prejudicial to future Imperial trade interests. Why, the whole weight of the Cabinet and of a united party behind it would have been employed to prevent such an unfortunate condition of affairs. It would be presumptuous on my part—more than that, it would be ungenerous—if I were to say that noble Lords opposite were unmindful of the future prosperity of those lands over which they have control—certainly in the case of the noble Earl the present Colonial Minister, for he brings to bear on the administration of that high office all those qualities which we in this House have long learned to recognise and admire. But over and over again Canadian Ministers have expressed their desire to come into closer commercial union with this country, and over and over again those proposals have been dismissed and treated almost with contumely by His Majesty's Ministers. I unhesitatingly assert that Mr. Chamberlain was right when he told this country some years ago that it would be criminal altogether to neglect these proposals. I think that His Majesty's Government are to blame for their failure to recognise the remarkable movement now in progress in the many lands and among the many peoples committed to their charge, and their failure to recognise the line of policy which would deprive that movement of disintegrating force, the tendency of which I have this afternoon ventured to bring before the notice of your Lordships' House.

Moved, "That an humble Address be presented to His Majesty praying for Papers relating to the recent changes which have been made in the tariffs of the self-governing colonies for promoting their economic development and the extension of their trade relations with the United Kingdom and foreign countries."—(The Duke of Marlborough.)


My Lords, the noble Duke, in the interesting speech to which we have just listened, dwelt upon the advantages which will accrue to the Mother Country from the concessions recently made by the Colonies to this country. I have not got the figures with me, and if I had I should not propose to go into them at any length. Let me say at once that, so far as Canada is concerned, there can, I think, be no doubt that of late years there has been an increase of imports from this country of dutiable goods, greater in proportion than the increase of imports from the United States, our principal rival, and this may be, I think, fairly credited to a preferential system.

As regards New Zealand, according to the last tariff the duty on certain foreign articles has been raised, and a duty has been put upon some foreign articles that have been formerly free. The noble Duke, I understand, said that the duty on British goods in some instances had been reduced. I do not in the least challenge the correctness of his statement. I confess it is the first time I have heard of such a reduction. I was under the impression that there had been no reduction of duty on British goods. If any reduction has taken place, it has been extremely slight. In fact, the noble Duke said it was slight. We may cordially welcome the very friendly spirit in which these concessions were made. They may possibly affect favourably the trade of this country. That depends greatly on whether the goods heretofore imported into New Zealand from foreign countries are articles in the supply of which we can compete.

As regards Australia, I cannot think that the changes made in the Australian tariff are likely to do us much good. I believe I am correct in stating that in so far as woollens and mining machinery are concerned, 12 per cent. would about cover all the alleged disadvantages of the Australian manufacturer against his British competitor. Yet the proposed duty is, I understand, 20 per cent. on machinery and 40 per cent. on woollen goods, thus leaving a wide "margin of security" as it is termed. It is true that foreign goods will pay 5 per cent. more, but as by far the greater part of the Australian imports under these heads come from this country, it is clear that the preference accorded will not produce any considerable effect.

I should like, my Lords, with your permission, to diverge for a few minutes from the immediate subject under discussion in order to dwell upon what is going on in Australia with reference to the fiscal reform. The Australian Government is in process of making what. I believe, is called "a scientific tariff." As we are constantly urged to adopt a similar course of action in this country, it will not be altogether devoid of interest to draw the curtain and see the scientists at work in their laboratory. I hold in my hand the draft of the Australian tariff, as it now stands. It is a voluminous document, and covers sixty-seven pages. I do not, of course, propose to weary your Lordships by going into it at length, but I should like to dwell on a few points, as they are highly illustrative of the intricacies and complications which arise in the development of this new science.

I turn to one item—pencils and penholders. They are classed under no less than seven heads, all of which pay different rates of duty. "Pencils of wood, but not including pencils with metal or other clamps or attachments, also pen handles of wood, including—and here remark the extreme scientific accuracy—metal attachments for nibs," are to come in free. And yet not all pencils of wood are to come in free. "Fancy pencils" are to pay a duty of 35 per cent. And yet, again, not all fancy pencils, for "pencils of wood with metal, rubber or other attachments" are to pay 5 per cent. Moreover "pencil cases, pen and pencil sets and penholders" are to pay 30 per cent. After this entry occur the enigmatical letters, "n.e.i." I was at first somewhat puzzled to know what "n.e.i." meant. I thought that it might possibly be some cabalistic sign only comprehensible to those who are initiated into the inner mysteries of the protective system. But I find on inquiry that it means "not elsewhere included." The warning and provision was really very necessary, for on looking over the tariff I find that almost every conceivable article that a human being could want, from his cradle to his grave, is "elsewhere included."

But I have not yet done with the categories. All sets containing pens and pencils and penholders are not to be taxed at 30 per cent. If a schoolmaster wishes to bring in a box containing a set of pens and pencils, it is to come in free. That is a very proper provision no doubt intended to encourage education. But now observe a very subtle distinction. If the same schoolmaster brings in a box containing no pens but only pencils, it is to be charged 35 per cent. In other words, a schoolboy in Australia will be able to write with an untaxed pen, but he must pay very heavily if he wants to use a pencil. Moreover, I wish to point out that every box which is imported by the schoolmaster for use in his school will have to be examined to ascertain whether it contains only pencils or only pens, or both pencils and pens. That seems to me to be rather an elaborate process. There seems, in fact, to be a very deliberate intention on the part of the Commonwealth Parliament to encourage the use of penholders and discourage the use of pencils. For the next item lays down that "penholders other than those of wood, and not being partly or wholly made of gold or silver" are to come in free.

Now, my Lords, let me give another instance—apparel and attire. If it is made of silk or wool, or contains either silk or wool, it is to be charged 45 per cent. If it does not contain any silk or wool it is to be charged 40 per cent. If it is made partly or wholly of textiles, felts, furs, or feathers it is to be charged 30 per cent. Mindful, however, of the important warning, "n.e.i."—not elsewhere included—I looked over the tariff to see whether this was all. And I found that there is another bewildering entry which provides that only 25 per cent. is to be charged on— Piece goods other than of wool or silk suitable for human apparel or to be worn in connection with the human body, having on one or both sides a teased, treated, combed, fluffed, or raised nap or surface in imitation of or resembling flannel in feel or appearance. That is to say, every man or woman landing in Australia will have to have their luggage examined to see whether any new wearing apparel which they may import is made wholly or partly of wool or silk or textiles, or fur, or felt, or feathers, or, if the material is not made up whether it is teased, treated, combed, fluffed, or has a nap at all resembling flannel. Nor is this all. Numerous exceptions are made. For instance, I observe one which shows that female influence is possibly at work in Australia, for corsets are only to be charged at 15 per cent. duty. Then, my Lords, there is a whole chapter dealing with false hair, which is divided into many categories, such as wigs, fringes, transformations and switches—whatever they may be—besides the important item of hair nets. These are not all to be charged at the same rates. Far from it. There are important differences. I think, my Lords, that I have now said enough to show what an extremely abstruse science this is.

Another incident of this system is that great pressure is brought to bear by various interests upon individual Members of Parliament. A whole bundle of circulars and letters of this descrip were recently communicated to me. I have selected a few specimens. Many of your Lordships may perhaps think that there is no great difference between salt sacks and salt bags. Any such supposition would be entirely erroneous. A gentleman who is interested in this trade writes— Dear Sir,—There has been considerable misconception on the part of Federal Members as to the difference between salt sacks and salt bags. He then goes on to point out that "a salt bag is made from hessian or calico," whereas "a salt sack is made from jute." Salt bags may, indeed, very properly be charged at the duty of 15 per cent. To this the writer says— We do not object, as these bags can be made locally, but the case is very different with a salt bag. That can only be imported from Calcutta. And then the writer, who is evidently a strong Protectionist, goes on to ask, in a tone of indignant remonstrance— Why should salt, gypsum, and manure sacks be singled out for this unreasonable impost? After this really noble burst of free trade enthusiasm, he goes on to explain his objections, and the objections are not far to seek. He says— My company imports 600 bales of these sacks annually, and the duty on these last year amounted to £570 with the rate at 10 per cent.; if it is raised to 15 per cent. it will come to £900 a year. Here, my Lords, is another case which has reference to the trade in cycles. It is pointed out that it is most necessary to impose a fixed duty of at least £1 on a frame and forks built up, enamelled, and plated outside Australia. These frames and forks, it says, are to be bought in Birmingham at as low a price as 10s. up to 15s., and the present duty of 25 per cent.—I beg to draw your Lordships' attention to this point—is— Totally inadequate to protect the Australian builder, whose frames and forks cost from £1 15s. to £2 to produce. The position is more acute, inasmuch as the English and foreign manufacturers' machinery produces more than enough for the home market. In other words, the English manufacturer is accused of dumping forks and frames in Australia. I give another case. It seems that under the general tariff glue is subject to a 30 per cent. ad valorem duty, whereas gelatine is taxed at the rate of 2d. per lb., which works out to more than 30 per cent. The writer from whom I quote says— It is absolutely impossible to differentiate by analysis or otherwise between glue and gelatine. It is also absolutely impossible to fix an arbitrary standard. And then he goes on to say— I have invested a large amount of money in glue, and intend going in for the manufacture of gelatine, but unless a substantial duty is imposed on glue and gelatine I am exposed to the importation of gelatine imported under the heading of glue. Let me give one further instance. Some glass manufacturers draw attention to the fact that the ad valorem duty of 25 per cent. is charged for "globes for light; chimneys for light; fish globes; confectionery glasses; cake glasses; bird seed boxes and cups; fly traps and telegraph glass-ware." They are of opinion that this duty of 25 per cent. must have been imposed without due consideration, for the rate on bottles is 35 per cent. The 25 per cent. charged on other sorts of glass, "though sufficient against British goods, is quite useless against German." They, therefore, earnestly demand that the 25 per cent. duty shall be raised to 35 per cent. I need not, my Lords, dwell on this point any more. All I can say is that I earnestly trust that this scientific, or pseudo-scientific treatment, as I should call it, will never be applied in this country. It may be scientific, but it appears to me to be admirably calculated to produce two effects. One is to encourage corruption amongst the minor officials of the Customs, and the other is to expose Members of Parliament to great temptation that they will sacrifice national to individual interests.

After this digression, for which I trust your Lordships will pardon me, I turn to the main issue raised by the noble Duke. The main issue appears to me to be whether, even taking the most favourable view of the concessions recently made by the Colonies to the Mother Country, they form a sufficient justification for a radical alteration in our fiscal system. I cannot think that they do so. The advantages which are claimed for a system under which preferential treatment should be accorded to the Colonies are two-fold. They are, in the first place, political, and, in the second place, commercial and economic. The political argument is, in my opinion, by far the more important of the two. However much we may differ as to the means, I conceive that all of us—free traders and tariff reformers alike—wish to attain the same object. We all wish to knit the Mother Country and the Colonies together by the closest bonds. Let me say at once that were I convinced that this object would be attained by the adoption of the policy now under discussion, I should approach the subject in a very different spirit. I should be far more inclined to consider earnestly whether some solution could not be found for the very serious economic difficulties which would still remain. But what valid evidence can be adduced that this object will be attained? So far as I can judge, none of much value. Such as there is, is purely hypothetical and speculative. The representatives of many of the Colonies have, indeed, urged the political argument with great skill and ability. That these gentlemen sincerely believe in the political advantages which would accrue from the system which they recommend cannot for one moment be doubted, but I must be permitted to say that the proofs which they adduce are far from convincing. Moreover, in spite of their unquestionable sincerity, they would be more than human if they were not to some extent unconsciously biased by the enormous and unquestionable benefits which the Colonies would derive if their products were accorded preferential treatment in the markets of the United Kingdom, whilst, at the same time, their own protective system underwent no substantial change, and this is really what they propose.

On the other hand, the views of those who are opposed to preferential treatment are not merely speculative. They are based on the actual experience of the past. The present generation appear to have forgotten that the preferential system was tried over a long series of years and was definitely abandoned in 1845. Anyone who wishes to know the results obtained under that system cannot do better than study the "Report of the Select Committee on Import Duties" presented to the other House in 1840. The economic results were deplorable. The timber merchants of the United Kingdom were precluded from buying good cheap timber from Northern Europe, and were forced to content themselves with inferior wood from Canada. The fraudulent wine merchant found it in his interest to adulterate good foreign wine with the cheap and inferior grape-juice of the Cape. Moreover, on all sides the duties were evaded. Wood from Northern Europe was shipped to Canada and then came to the United Kingdom as Colonial timber. The Brazilian coffee-grower sent his coffee to the Cape; it was then imported into the United Kingdom as Colonial coffee. In fact, as the Committee of 1840 reported, the system gave rise to endless complaints and causes of vexation.

What, however, were the political results obtained under this system? They were the reverse of satisfactory. It can surely not be a mere coincidence that the palmy days of the Little Englander were contemporaneous with the period of preferential treatment. Mr. Cobden, whose name now appears to act on many people in this country like a red flag to a bull, was not the only Little Englander of those days. Even so late as 1852 Lord Beaconsfield, who eventually became one of the main pillars of modern Imperialism, spoke of the Colonies as "millstones round our necks." The utterances of the statesmen of this period abound with passages of a similar nature. Neither can this be any matter for surprise. The interests of every class in this country, and especially of the commercial classes, suffered from their being obliged to buy Colonial produce not altogether suitable to their wants, and from their being unable to procure suitable food and raw material at lower rates in the markets of foreign countries. They naturally showed their resentment by chafing under the Colonial connection. The result was constant friction, and the birth of Little Englandism in an extreme form. I cannot help thinking that there would be a great risk that this is what would happen again. Indeed, in some respects the risk would be greater now than it was sixty years ago, owing to the larger electorate to which an appeal has to be made. We all know that the standard of veracity in the country sinks to its lowest point during periods of electoral excitement. We also know that under whatsoever fiscal system is adopted, the price of bread will fluctuate. I confess that I should look forward with some dread to a general election taking place when every platform in the country would ring with statements to the effect that the dear loaf was due to the sacrifices we were making in order to benefit our countrymen in the Antipodes. Such a contingency, and it would very probably occur, is not, I imagine, calculated to strengthen the bonds which unite the Mother Country and the Colonies.

It is often contended, in answer to these arguments, that the results which ensued prior to 1845 would not ensue now. To a certain limited extent this contention is valid, for no one, I conceive, proposes that so great a preference should be granted to Colonial produce as was granted sixty years ago. The difference is, however, only one of degree. There would certainly be a rise in the price of food and raw material unless the Colonies could send in supplies in sufficient quantities and at similar prices to those now obtained from foreign countries. Now the main contention of the Colonial representatives at the last Conference was that they would be able to furnish these supplies. Sir Joseph Ward, Sir William Lyne, and others, contended that there would be no rise of price, and fully recognised the validity of the British objection to the adoption of any system which would involve a rise. With all deference to these high authorities, I may say that they seem to me to take far too sanguine a view. There are, indeed, vast undeveloped tracts in Canada and Australia. Moreover, the population of those countries is growing. It is perhaps permissible to look forward to some remote time when possibly the British Empire will supply all its own wants. But I would ask any one who considers this subject calmly, what prospect is there that within any reasonable time these Colonies with their aggregate population of some 11,000,000, will be able to supply the £160,000,000 worth of food and raw material now supplied by foreign countries for the use and consumption of the 44,000,000 inhabitants of these Islands? A long time must elapse before they will be able to do so, and in the meanwhile every one in this country will have to pay more for whatever food and raw material he now gets free of duty from foreign countries. As Mr. Lloyd-George very pertinently remarked at the Conference, a poor man cannot wait for cheap bread.

My Lords, I feel the difficulty of discussing this subject fully without running the risk of using language which may seem to show a want of sympathy for the Colonies. I trust that no words will inadvertently escape my lips which will be capable of any such construction. But, after all, the subject in its commercial and economic aspects is a business matter, and must be discussed on businesslike principles. Mr. Deakin said at the Conference that any arrangement which can be made must be to the mutual advantage of both parties. The advantage to the Colonies in all the proposals which have so far been discussed is evident enough, but we have also to inquire what advantage would be derived by the inhabitants of these Islands. I must confess, that so far I altogether fail to see the advantage. Bear in mind that there is no question of free trade within the Empire. It may readily be admitted that the idea of the 400,000,000 subjects of the King of England exchanging freely their products and manufactures is not merely seductive, it is grand and statesmanlike, but it is admitted on all sides that there is not the smallest prospect of this system being adopted, and by none has the impossibility been admitted more fully than by that eminent statesman, Sir Wilfrid Laurier, who, as I gather from his public utterances, is a strong free trader in principle. Moreover, a few months ago, Mr. Deakin was asked in the Australian Commonwealth House of Representatives whether he was prepared to advocate and support a scheme of Imperial free trade. His reply was very explicit— I am not prepared to advocate a scheme of Imperial free trade, and cannot believe that such a policy would be advantageous to the industrial interests of Australia. More than this, not only is there no prospect whatever of adopting a policy of free trade within the Empire, but it is abundantly clear that the Colonies have not the least intention of abandoning their protective system, or of making any concessions in the nature of preference which would be of real benefit to British trade. I do not, of course, in any degree criticise them for adopting this attitude; they must be the judge of what is best in their own interests. Moreover, I am not concerned to show that the system of free trade can be adopted by all countries under all circumstances. All I maintain is that it is a system adapted to the peculiar conditions which prevail in this country.

When, in the course of the discussions of the Conference, Mr. Lloyd-George said that preference or no preference was the question recently placed before the Australian electorate, Mr. Deakin, at once challenged the statement. He said that the logical order was protection first and preferential trade afterwards. It is perfectly true that the Colonies have already given what appear to be certain advantages to British trade, and they would perhaps be willing to accord others. But on closer examination it is found that the advantages so far accorded are of little real value, and I cannot help thinking that the future will be like the past. Consider what occurred in the case of the British woollen industry. The concessions made to that industry under the Canadian tariff of 1900 were certainly advantageous to British trade. The result was that British woollens were able to compete successfully with the home-made manufactures. The Canadian woollen manufacturers, when once they became alive to this fact, at once protested, with the result that the duty on British woollens was raised.

Mr. Logan, a Liberal Member of Parliament, and a woollen manufacturer of Nova Scotia, expressed himself on this subject in the following very explicit terms:— 'Made in Canada' should be the watchword of the people of Canada. Hon. Gentlemen on the other side of the House are great Chamber-lainites. They are always shouting in favour of Mr. Chamberlain. Yet the very first principle enunciated by Mr. Chamberlain is that this country should lower its tariff on things which are peculiarly British. They know that if to-morrow Mr. Chamberlain were returned to power and he should ask the people of Canada to lower the duty on woollens which are manufactured in England, they would cry their hearts out before they would allow such a lowering to take place. If Mr. Chamberlain's policy means the destruction of Canadian industries for the benefit of British industries, I am opposed to that policy. I confess, my Lords, that I admire these Canadian protectionists. There is no ambiguity in their language. They let us know exactly what they mean, and what they want. They remind me of Prior's well-known couplet— Euphemia serves to grace my measure. But Chloe is my real flame. Preferential treatment to Great Britain occasionally serves to grace the measure of the Colonists, but their real flame, to whom they adhere with unswerving fidelity, is protection—ultra protection—to native industries.

I invite those who think that an effective preference can be given in Canada to British manufactures to study the proceedings of the Tariff Commission which travelled about Canada to examine into this question about a year ago. Everywhere there was a demand for protection against the British manufacturer. At Three Rivers, on the north shore of the St. Lawrence, protests were made against the Glasgow manufacturers of cast iron water-pipes dumping their manufactures into Canada. In the neighbourhood of St. Hyacinthe, near Quebec, higher duties were demanded on felt and straw hats as a protection against the manufacturers of Stockport, Denton, and Luton. In New Brunswick, the owners of granite quarries, who, I believe, are mostly Scotsmen, asked for a curtailment of the British preference on tombstones, in order to be protected against their fellow-countrymen of Aberdeen, who, it appears, engage in a profitable, if somewhat lugubrious trade in tombstones; and so it was elsewhere.

Let me now quote a voice from the Antipodes. Sir William Lyne said— If I can make the tariff prohibitive, I shall be glad. Importers are parasites on the trade of the Commonwealth. Moreover, public opinion, both in Canada, New Zealand and elsewhere, speaks with the same voice. The Toronto Globe recently said— We may as well admit that British manufacturers want a market, and that Canadian manufacturers will not let them have one in the Dominion. And the Evening Post, a New Zealand paper, said— On our part there is no intention whatever of sacrificing any of our own industries in pursuit of the idea of Colonial Preference. It would be possible to multiply statements of this description. In fact, so far as we now know, the case remains very much in the same condition as when, twelve years ago, Mr. Chamberlain used the following words— The proposal of the Colonies requires that we should abandon our system in favour of theirs, and this is, in effect, that while the Colonies should be left absolutely free to impose what protective duties they please, both on foreign countries and on British commerce, they should be required to make a small discrimination in favour of British trade, in return for which we are expected to change our whole system and impose duties on food and raw material. Well, I express again my own opinion when I say that there is not the slightest chance that in any reasonable time this country, or the Parliament of this country, should adopt so one-sided an agreement. The foreign trade of this country is so large, and the foreign trade of the Colonies is comparatively so small, that the smallest preference given to us upon that foreign trade by the Colonies would make so trifling a difference that I do not think the working-classes of this country would consent to make a revolutionary change for what they would think to be an infinitesimal gain. If I am not detaining your Lordships too long, there is yet one further point to which I wish to allude. Nothing is more remarkable than the little attention which has been paid to India in the course of these discussions. Yet the subject is one of vital importance. Out of the £87,000,000 worth of manufactured goods which annually leave this country for British possessions, no less than £41,000,000 go to India. Now the Indian Government, in a despatch addressed to the Secretary of State during the time when my noble friend, Lord Curzon, was Viceroy, stated in very clear terms that India prospered under the present free trade system, and deprecated a change. Sir James Mackay, the representative of the Indian Government at the recent Conference, said— There is no sign that the prosperity of India is insecure, nor is any important trade or industry closely menaced by the restrictive tariffs of foreign countries. It is a fact of no small importance that the purchasing power of India in British markets and her ability to discharge her sterling obligations are wholly dependent on her trade with foreign countries. These sterling obligations, which I may remind your Lordships are almost exclusively held in this country, amount to the interest on no less than £132,000,000 sterling.

Moreover, Sir James Mackay drew attention to another very important point. Your Lordships will remember the history of the cotton duties in India. They were abolished in 1882, and I may say that, as I was Financial Member of the Governor-General's Council at that time, I well remember, and I think the noble Marquess opposite, who was then Viceroy of India (the Marquess of Ripon) would bear me out in my statement, that in abolishing those duties, the Government was not only influenced by the advantages which would accrue to India from the adoption of a free trade system, but also by the very great desirability of putting a stop to an acrimonious discussion in which British and Indian interests clashed or appeared to clash. Subsequently, as your Lordships are no doubt aware, in view of the fall of the rupee and the high military expenditure which was incurred, the duties were re-imposed, but their protective character was nullified by the imposition of an excise duty on Indian manufactures equivalent to the customs duty on the imported articles. When once a preferential or protective system is adopted in this country I conceive it certain that an outcry will be raised in India that the excise duty should be abolished, and under the supposed circumstances I do not see how we can contend that a system which we have adopted ourselves may not also be adopted with advantage to India. Leaving aside the purely fiscal and economic arguments involved in the discussion of this question, I ask whether it is politically wise, more especially in the present state of India, to raise again a discussion of this nature? To me it would certainly appear to be in the highest degree imprudent.

My Lords, it is not difficult to anticipate the general nature of the answer which will be made by the Government to the proposals of the noble Duke. Neither should I have intervened in this debate had it not been that voices—perhaps somewhat beery voices—from Peckham and elsewhere have recently warned us that conceivably before long the question which we have been discussing will become, to a greater extent, within the arena of practical politics than is at present the case. Moreover—and here I will make a confession which may, perhaps, be received with some satisfaction by noble Lords behind me—I trust I may turn out to be a false prophet, but I hardly think that the Budget recently introduced into the other House is of a nature to postpone the advent of the time of which I speak. An eminent French philosopher once said that in order to succeed in life a man should act as if he were going to live for ever. The Prime Minister appears, I cannot but think, to be acting financially as if he thought that a Government in sympathy with free trade would last for ever, and this would appear to be rather a sanguine forecast.

In a debate which recently took place in another place on the subject of tariff reform, Mr. Balfour made a speech which, to a certain limited extent, I read with pleasure. He based the necessity of a fiscal change not on the protectionist arguments which are so frequently used, but on the necessity of increasing the revenue, a principle to which free traders do not object, although they look with some anxiety as to the manner in which the principle is applied. But he added that, in reforming the fiscal system, he hoped an opportunity would arise of making arrangements with the Colonies which would be a great source of strength to the Empire. I submit, with all deference to Mr. Balfour's high authority, that the accrual of any greater strength by the adoption of a preferential system is more than questionable. Apart from the very great economic objections to preferential treatment, I deprecate any attempt to commercialise patriotism, or to assess the loyalty of the Colonies in the schedule of a Tariff Act. We are now united by community of race, by community of language, by the traditions of the past, and by what is, perhaps, the mightiest tie of all—a common Sovereign. I say that these bonds of union suffice. Let us leave well alone. Mr. Chamberlain, in a speech which was quoted by the late Prime Minister at the first sitting of the Colonial Conference, warned us against forging any link with the Colonies which would be galling in its incidence. I cannot but think that preferential treatment would soon prove galling to one or other side, and very probably to both.


My Lords, the noble Earl on the Cross Benches (Lord Cromer) speaks on matters of Imperial import with an authority which is very great in the councils of this Empire, and if I venture, on certain points, to criticise the observations he has just addressed to your Lordships, I hope he will understand that I do so with the greatest respect for his authority. The noble Earl stated that he desired, in any observations he had to make with reference to the Colonial question, to say nothing that could be in any way disrespectful to the Colonies, but I am not quite sure that his excursion into the Australian tariff was altogether in consonance with the desire. I am not quite certain that his views upon the Australian tariff would be altogether agreed to by those in Australia who framed that tariff, but of this I am certain—that if the noble Earl would pay the same attention to the tariffs of the United States and of Germany he would find even more minute classification, which has been eminently successful in promoting the trade of those countries.

The noble Earl made no allusion to the fact that, under the Australian tariff, a very large proportion of the goods exported from this country to Australia are admitted free—something, I think, like one-third. Therefore, what does not apear in the Australian tariff is a matter of considerable importance. Not only is it worth while in this connection to examine the tariffs of scientific countries, but if he examined the tariff even of an unscientific country—the Customs tariff of the United Kingdom—the noble Earl would find there equal material for laughter and criticism. The noble Earl is so full of the difficulties and dangers of making a tariff that in the course of his speech he utterly failed to recognise the difficulties and dangers into which we are drifting at the present moment, and by calling attention to which the noble Duke has performed a public service.

Let me dwell for a moment on the previous history of this question. The noble Earl made a great point of the fact that preferences had existed and been abolished, but I think he forgot to mention that they were abolished under totally different conditions. The preferences were forced upon the Colonies by the Mother Country, not coming as part of a mutual bargain, as they do in this case; yet when they were abolished they were abolished in the teeth of violent protests from the Colonies from whom that preference was taken. Moreover, they were not abolished from any inherent objection to them, for Mr. Gladstone himself stated that the preferences were of considerable value. He said— In 1843 I pleaded strongly for the admission of all the Colonies to the privilege (of preference) granted to Canada. They were abolished, as a matter of fact, in order to make our duties symmetrical, and for a long period they have remained abolished.

Your Lordships are familiar with the steps by which this question has again come before the country. There was the denunciation of the Belgian and German treaties. Then there was the repeated demand of the Colonies that preference should be given, the actual giving of preference by the Colonies themselves, and then the Colonial Conference of last year. It is important to observe that on that occasion the Government really stood upon two legs. The Government, first of all, said, through the mouth of one of their spokesmen, that they were most sympathetic with the Colonies and most anxious to meet them in every possible way, but that they had to consider the poor people of their own country and could not interfere with the tariff for fear of making their burden heavier. The Colonial Ministers then said; "We do not ask you to do anything that would increase the burden upon the poor people of whom you speak. Can you not give us a preference upon articles on which you already have a duty, such as sugar, tobacco, and wine?" The Government then took the line that they were unable to consider the policy of treating the Colonies separately from other countries.

What I feel it is important for this House to know is what the Government's policy is going to be as regards the development of trade with the Colonies. They have admitted at the Colonial Conference that the preferences were of value; they have admitted, through the mouth of many of their spokesmen, that they are proud of our Empire and anxious to promote its well-being; and they ended the Conference with various suggestions as regards an all-red route and other schemes for closer ties with the Colonies, of which we have heard nothing since. The policy of mere sympathy may be a very valuable one; the attitude of the Government may be perfectly correct; but are they aware of the result of their policy? And if they are aware of it, why do they not tell the country? The result is an entirely new departure in the treaty-making powers of the Empire and the taking away of important trade privileges from large sections of the people of this country. The noble Duke referred in his speech to various communications between the Foreign Office and the Canadian Minister for Marine and Fisheries. Two despatches on this subject were quoted by the Canadian Minister in the Dominion House of Commons on 3rd March this year. One was a despatch written by the noble Marquess, Lord Ripon, in June, 1895, which laid down the basis of negotiations between the Colonies and other countries. It stated that— The negotiations then being between Her Majesty and the Sovereign of the foreign State must be conducted by Her Majesty's representative at the Court of the foreign Power, who would keep Her Majesty's Government informed of the progress of the discussion and seek instructions from them as necessity arose. The other despatch is from the British Government to the Canadian Minister, dated 4th July, 1907. It lays down a totally different principle, and asserts that— The selection of the negotiator is principally a matter of convenience, and in the present circumstances it will obviously be more practical that the negotiations should be left to Sir Wilfrid Laurier and to the Canadian Minister of Finance, or the Canadian Ministers, who will doubtless keep you informed of their progress. In dealing with matters of treaty-making I should desire to treat them with the greatest circumspection, and not say anything which could embarrass the relations of His Majesty's Government with the Colonies or any foreign Power. I only desire to say that the wording of this despatch is indicative of a totally different policy. It indicates that certain large powers are being granted to Canadian Ministers, as regards their dealings with foreign countries, which have not hitherto been enjoyed by them. I do not say whether this is right or wrong, but it seems to me to mark a great revolution in the policy of the Empire, a revolution effected silently, without the knowledge of the bulk of the people of this country, and without any Papers being presented to the British Parliament on the subject.

I venture to hope that the noble Earl the Secretary of State for the Colonies may be able to give some statement as to the views of the Government upon it, and also lay whatever Papers it may be possible for him to present to Parliament. It is important more from what it may mean in the future than from what it means in this particular instance. If it is possible for the Governments of His Majesty's Dominions beyond the seas to make these commercial treaties with foreign nations, involving concessions which are in the end prejudicial to British trade, it is highly important that those negotiations should be conducted with the greatest care, and that the Ministers concerned should be kept fully informed as to the exact effect they will have on the industries concerned. For what has been the effect of this convention between Canada and France? The noble Duke has dealt fully with the matter. He has pointed out that the effect has been to reduce considerably the value of the British preference. The Minister for Customs in Canada, speaking in the Canadian House of Commons, said— My own judgment is that, taken in the gross, the effect of the French treaty will be to reduce the British preference from 33⅓ per cent. to 23⅓ per cent, a reduction of.10 per cent.; and upon many manufactures the difference between the two tariffs is only 2½ per cent. in favour of Great Britain. The tariff on embroidery and lace under the preferential tariff is 25 per cent.; under the French treaty tariff it is 27 per cent. The tariff upon ribbons under the preferential tariff is 22½ per cent.; under the French treaty tariff it is 25 per cent. On silk manufactures it is 30 per cent. under the preferential tariff, as against 33 per cent. under the French treaty tariff. The trade in all these lines of goods, which is of considerable importance to this country, and in which we have serious competition, has practically been annihilated by this treaty made with France.

So far as it is possible to judge from the general tendency, the Colonies are anxious, and properly anxious, to develop trade with the Mother Country, but the Canadian treaty shows that if we are not prepared to meet them with concession for concession, they may be driven, in their desire to increase their trade, to concessions that will minimise and may eventually destroy the preference which they give to us, and the value of which is admitted to the full by His Majesty's Government. Not only is it the fact that by this treaty the value of the preference is largely reduced. There is much more. As the noble Duke has pointed out, immediately and at once, under the operations of the most-favoured-nation clause, twenty other countries are ipso facto admitted to every benefit which France enjoys by means of the treaty. Having regard to the complications that may arise from the most-favoured-nation treaties and the development of the policy of Colonial treaty making, we may, eventually, lose all the advantage of preference we have enjoyed. This, so far as I can judge, is simply because His Majesty's Government banged, barred, and bolted the door in the faces of the Colonial Premiers at the Colonial Conference. I think it is important that when His Majesty's Government take a deliberate step of that kind, they should present the country with the fullest information as to the results. We have great competition with Switzerland in hosiery and lace, with Austria in the export of ready-made clothing, and with Japan and other countries in the manufacture of silk, and in each of these industries the English manufacturer has come to depend on a valuable preference against his competitors in the markets of Canada. That preference has now been reduced practically to a minimum. Is it wonderful if one is disposed to feel that His Majesty's Ministers, when they sympathise with the Colonies in their aspirations, are only doing lip service to the idea, especially when we find that in no single instance do they attempt to carry out those commercial relations with the Colonies which they admit to be of advantage to this country?

All over the world nations are tumbling over each other in the endeavour to obtain a share in the preference we have up to this time derived in Canadian trade. Great forces are at work in the British Empire which will not be controlled. There is a growing feeling of nationality in the Colonies, a desire to be treated as nations in the councils of the world; on the other hand, with the necessity for large imports, there is a desire to have them from the Mother Country. Those two forces are at work within the British Empire, and His Majesty's Government allow matters to drift because they will not take the only action which will meet the position. It is difficult to speak upon this question without introducing party feeling into it, but I most sincerely desire not to do so. This is a matter of too great importance. His Majesty's Government may be right or they may be wrong in the line they are taking, but whatever the results of their refusal of preference to the Colonies may be, the constitutional result in the British Empire may be fraught with untold consequences. I venture to hope that the noble Earl will be able to give some information as to the views of His Majesty's Government of what has happened in the affairs to which the noble Duke has called attention.


My Lords, I have been struck, in the course of this debate, with the two powerful speeches which have been made by the noble Duke who initiated this discussion and by the noble Viscount who has just supported his views. They confined their remarks to two of the great issues involved. First, the noble Duke dealt entirely with the question of Colonial preference; the noble Viscount dealt with a constitutional question outside that of preference altogether, and proceeded to censure the Government in the conduct of their diplomatic relations. It fell to my lot a few years ago to take part in the settlement of the financial relations between this country and India, and I think that one of the most important questions arising in considering inter-colonial relations and alteration of relations between this country and Colonial dominions beyond the seas is the effect upon the financial position of India.

Perhaps the House will allow me to recall what is the position of India in this matter, and state how cautiously both branches of the Legislature ought to proceed in dealing with this question. It is impossible to alter the policy of this country with reference to its Colonies and foreign relations and exclude India altogether from consideration. The noble Duke spoke of the large amount of trade that we do with India. India buys from the United Kingdom and Colonies 50¼ millions of the 68¾ millions which she imports. The exports from India are a much more important question. The entire exports of India amount to over £106,000,000, of which £39,000,000 go to this, country and its Colonies, the Colonial trade being very small. Any attempt at preferential, or discriminatory, or retaliatory duties must have an important bearing on Indian trade, and the greatest caution is necessary in the consideration of the matter.

The position of India is based on free trade. It is based upon free trade practically by the direction and control of the Parliament of this country. Lord Cromer alluded to the happy time when he was enabled to advise the Viceroy and the Viceroy's Council to dispense with the cotton duties and the other duties in 1882; but a great crisis afterwards arose in Indian finance, and ten years later the present system of Indian relationship with finance was definitely settled. The Indian tariff is a revenue tariff and not in any way a protective tariff. It is based on free trade. There is a general duty of 5 per cent., with the exception of coal and railway material. On cotton goods there is a duty of 3½ per cent., with a corresponding excise duty upon the manufactures of India. In the main, India depends upon its agriculture and the cheap production of food and of other commodities chiefly sold to foreign nations. India is a debtor country. Therefore its exports must always be larger than its imports. The overwhelming proportion of the Indian export trade is not with the United Kingdom. We sell to India about two-thirds of what it imports; and we take about one-fourth of what it exports. Therefore, any diminution of the trade of India with her foreign customers would lessen her power of buying English products and of meeting her obligations to her English creditors. The capital upon which India has constructed her railways and other great works has been in the main found by Englishmen. I think the noble Earl on the cross benches put the amount of English capital in India at £130,000,000.


One hundred and thirty-two millions, exclusive of the Rupee Loans.


I think our claim upon India is even larger than that. As I have said, three-quarters of the export trade of India is not with us but with foreign nations; and therefore any action which would affect that foreign trade would be attended with risk to the financial relations between this country and India. I should like to call the attention of the House to the procedure which was initiated by Lord George Hamilton in dealing with this question. When the question of tariff reform was first raised by Mr. Chamberlain, Lord George Hamilton, then Secretary of State for India, sent a despatch to the Government of India asking for their views as to how the proposed preferential, discriminatory, or retaliatory duties would affect Indian trade and finance, and what was the opinion of the Council of the Government of India upon it. That called forth from Lord Curzon and his colleagues a despatch of singular ability, and one worthy of Lord Curzon's name and of his experience and preeminent administrative ability. I should like to read a word or two from that despatch. It says— In this connection we desire to emphasise with all the weight possible, the argument elaborated in the paragraph of the Financial Minister. The factor there stated is peculiar to India and differentiates her case from that of any other member of the Empire. India is a debtor country. The Report then proceeded— Her net obligations are approximately 16 millions sterling per annum. The major part of this great charge is payable in a currency different from that in which her revenues are collected. The only means consistent with national solvency of discharging this obligation lies in the preservation of an equivalent excess of exports over imports—in other words, in maintaining a sufficiently favourable balance of trade. It is therefore a vital object with us to stimulate our exports by every means in our power, to seek new markets and develop old ones, and to remove all obstacles which stand in the way of growing external demand. If then, notwithstanding the safeguards which we possess, we should unhappily be drawn into tariff wars with powerful countries, it cannot be doubted that, whichever way the ultimate victory might incline, our export trade would for the time being be injuriously affected. Such a result would be fraught with the gravest consequences. By ten years of effort, sacrifice, and perseverance we have slowly built up a fair measure of public confidence in the stability of our finance. Exchange has been steadied, our credit is good and improving, our rupee securities are rising in relative value in the London market, and we have created the nucleus of a reserve of gold. But if by a change of fiscal policy the balance of trade in our favour should dwindle or disappear, the whole work of ten years would be sacrificed; and the setback to our trade, our revenues, and our credit would immensely outweigh any benefits that we might reasonably expect from the most unconditional surrender of our opponents in the war of tariffs. We cannot sufficiently impress this danger on your attention. Even if the chances of success were greater than we conceive them to be, we hold that the certain cost of the struggle and the severe penalties of defeat would be too heavy a price to pay. In another part of the Report the Government of India declare— If the United Kingdom should eventually resolve to adopt a policy of preferential tariffs or of retaliation, it is conceivable that the device of attacking her through her chief dependency might receive further development at the hands of foreign countries. In that event, if India adheres to her former principle of refusing to differentiate between the imports of different countries, she may suffer by being made the battlefield of conflicting interests with which she has no direct concern. That is the question which I desire to place before your Lordships—the supreme interest that India has, as a great debtor country, in the maintenance of free trade, and the fact that any impairing of her financial power would re-act upon a large section of the inhabitants of this country and also upon her commercial relationships elsewhere.

After all, this question of Colonial preference, if you reduce it to pounds, shillings, and pence, is a very small matter. What can it amount to so long as the Colonies are firmly determined not to admit British manufactures in competition with their own? I would also point out the great danger, in the present state of public opinion in India, of any approach to tampering with its financial position, which could be twisted, and possibly would be twisted, into an attack upon the British Government in reference to the Government of India. This question of the interests of India demands the most careful consideration of this country before we sanction in any way, directly or indirectly, any interference with our sound and safe fiscal policy.


My Lords, after the weighty and eloquent speeches on the grave matter which is the subject of this debate from the noble Earl who sits in front of me and the noble Viscount who has just addressed the House, my courage might well fail me in attempting the task of replying if it were not that this is a matter to which, for various reasons, I have been forced to give years of consideration. Every year that passes confirms me more strongly in views the very opposite of those in which I have been brought up, and the very opposite of the views which have been so eloquently put before the House by the noble Lords to whom I have referred. I am sure that this House, which has always tolerated the unaffected expression of strong convictions, will sympathise with me in the very serious task which now lies before me. It is difficult to select from the arguments which have been addressed to your Lordships against the doctrines advocated by the noble Duke those which most require reply. I cannot possibly attempt to deal with them all. But I will seek to direct your attention for a short time to one or two points which seem to me to be of the greatest importance.

First of all, may I say a word on the subject of India? I think we are all agreed that in the consideration of this question the effect of any changes in our commercial policy upon India must be regarded as of the very highest importance. I am glad that emphasis has been laid upon this branch of the subject to-night, because, if I may criticise my own side, I should like to say that in the arguments of the advocates of preference insufficient attention has hitherto been given to the Indian part of the case. But I for one am unable to follow the argument that we are debarred from adopting a policy which we believe would be of great commercial benefit to the other portions of the Empire because of its reflex action upon India. We have had quoted to us the despatch from the Viceroy's Council in India under Lord Curzon, giving not, indeed, a negative to the proposal of preferential trade within the Empire, but certainly expressing grave misgivings as to the effect which preferential trade might have upon India.

I did not come here prepared for this particular point, but my memory must entirely fail me if I am mistaken in thinking that the gentleman who was at that time the Financial Member of Council in India—Sir Edward Law—took a different view upon this matter, and, indeed, is an advocate of preferential trade in the interest of India herself. Whatever may be the opinions which he held at that time, there is no doubt that that gentleman, the financial adviser to the Government of India—and a man who has been financial adviser to the Government of India certainly counts for something in a question of this kind—is at this day a strong advocate of preferential trade in the interests of India, inasmuch as he has just written the preface to a book on this subject, which discusses the whole question with remarkable freshness and ability, and which is from first to last one of the strongest pamphlets published in favour of preferential trade within the Empire. I mean "India and the Empire" by Mr. Webb.


Sir Edward Law-presented a separate Minute, and Lord Curzon in the course of his despatch said he could not do better than emphasise these remarks of Sir Edward Law.


I have not had an opportunity of referring to Sir Edward Law's Minute, but the fact remains that Sir Edward Law must now be accounted, in view of his latest declarations on the subject, an advocate of the policy which the noble Lord has just criticised. So far I have failed to understand what is the injury which it is feared the introduction of preferential trade within the Empire is going to do to India. It has been pointed out to us that the export trade of India is of vast importance to her. Obviously, and it is of vast importance to us. But so far as her export trade to this country is concerned, that certainly is not going to be injured by an arrangement which will give her an advantage in our market over her foreign competitors. Are her exports to foreign countries to be injured? Why should they be? Do foreign countries at present buy of India for love of India? On the contrary, they impose heavy duties—in many cases exceedingly heavy duties—with the object of keeping Indian manufactures out of their markets. They only buy freely from India the things which they cannot dispense with—the raw materials which are absolutely essential to them for their own industries. And they will continue to buy them—they must continue to buy them—whatever policy India adopts.

The present system and position, under which foreign countries do all they can to keep out Indian manufactures—and we are powerless to do anything to assist India—is a most extraordinary one. Take the exports of jute. Foreign countries derive great quantities of unmanufactured jute from India, and they will continue to buy as much as ever they can get, whatever system of tariff may be adopted in this country, the Colonies, and India, because they need it for their factories which compete with us. They encourage the importation of raw jute from India, but they put heavy and prohibitive taxes upon the import of the manufactured article. What is the result? Indian jute is taken to foreign countries to be made up into the manufactured article, and that manufactured article is then imported into Great Britain to compete with our own manufactures, and is competing with them to our detriment.

Is there hot something most unnatural in an arrangement and system, under which foreign countries while excluding the manufactures of India buy from India the raw material of those manufactures, manufacture it themselves, and then import it into England to compete with our own manufactures of the same kind. Thus the profit of converting the raw material grown in one part of the Empire into finished goods to be consumed in another part is taken away from the workers of the Empire by the foreigner

My contention is that there are obvious respects in which India will benefit from the system of preferential trade, within the Empire, and that the fear that she will be damaged depends entirely upon the assumption that foreign Governments will try to strike at us through India—to punish us for adopting a principle in our own tariff legislation which they all adopt themselves. But I do not believe in the least in this bugbear that foreign nations are going to turn round and punish us for doing what they all do. No doubt they are very glad of a system under which they tax our imports as much as they please, and we never retaliate. But on what conceivable principle, either of equity or respect for the public opinion of the world, or for their own interest, are they going to adopt this policy of punishing us? And if they do, how are they going to carry it out? They already tax our goods in every case ill which they do not think they would be injuring themselves by doing so. It seems to me that we are excessively timorous if we think that as a nation, as an Empire, we are not in a position to take a course which is freely taken by our own Colonies and by almost every foreign country. I deprecate the assumption that foreign countries are so unreasonable that they are going to depart from the policy they have always hitherto pursued of using their tariffs for their own interests, and that they are going to punish themselves and cut their own throats in order to penalise us for doing what they all do.

Passing from India to the more general question of the effect of, mutual advantages in respect of tariffs upon the trade of different' parts of the Empire, I must protest most strongly against the. assumption which has been made by the noble Viscount who has just addressed us that because the Colonies are protectionist, and likely to remain protectionist, therefore the advantages we should derive from preference in their markets are never likely to be very considerable. That seems to me to be the root fallacy of all those who take a strong line opposed to preferential tariffs. Let me say at once that in my view of preferential trade I am unaffected by the extent to which our Colonies may adopt protection. I am unaffected by the hope or fear that a preferential system may lead to the general adoption of free trade throughout the Empire. I am somewhat doubtful of the advantages of such a general system of free trade, but we need not discuss that now. My whole case rests upon this contention, that, however much the Colonies protect their own manufactures—and, perhaps, even in consequence of that protection of their own manufactures—they are bound to be great importers, great buyers, and the difficulty which meets us on all sides of getting sufficient markets for our own exports makes it a matter of immense importance to us that we should be the first to supply, as far as we can supply, that vast quantity of imported goods, which the Colonies, however much they protect, are going to require.

My contention is that, however much these great and growing countries may protect industries in which they are specially interested, they will still be great buyers from the outside world, and the question is whether or not we are to be the principal sellers. They all wish us to be. They are all anxious to buy from us. I admit that the Colonies are keen about protecting their own industries, and I rather sympathise with them; but let them protect as much as they please, they are still going to be great importers. Canada, under a free trade or at any rate a Jess protective system, had seventy or ninety, million dollars worth of imports, today she has from 200 to 300 million dollars. Under a protective system the imports of the Colonies are growing just as the imports of protected Germany are growing. The idea that, the adoption of protection by a country is bound to reduce its import trade is exploded by the facts all round us.

Highly protected countries are continually increasing their, foreign trade. Granted that the Colonies are all protectionist, they remain great markets, and our point is that in those markets we now have an advantage which we are in danger of losing. It consists in the possession of a preference which we calculate will give us the lion's share in the purchases of those countries which are already of such great importance and which have such immense futures. As long as the Colonies, buy from us rather than from the foreigner the vast mass of the articles which they require, our point is gained. The danger which we run now is that we may no longer get the lion's share of these enormous purchases of the Colonies; that if we do nothing on our side to encourage preferential trade throughout the Empire the great advantage which we now enjoy, and which will be so much greater as time goes on and the trade of the Colonies develops, will gradually disappear. That is the danger with which we are confronted, the danger of losing the present great advantage, and the much greater future advantage, of being the principal suppliers of the great markets of the Colonies. The Colonies have taken the lead in this matter of introducing the system of preferential trade. They have done so from two motives. In the first place, there is the motive, freely and eloquently admitted by the late President of the Board of Trade, the present Chancellor of the Exchequer, when he said they had acted in this matter "in a spirit of comradeship and even of affection." That is perfectly true. Their spirit of comradeship and affection may not go so far as the sacrifice of their own interests. Why should we wish it? It is sufficient for us that, while safeguarding their own interests, they are anxious to give us the advantage in their own markets as against the foreigner, not as against their own producers. They will protect themselves first, but they are anxious that such goods as in their own interests they require to buy shall as far as possible be bought from other parts of the Empire rather than from foreign countries. I have said they are influenced by considerations of kinship and affection. They are also influenced, no doubt, by the hope that in taking this line they will hold out sufficient inducements to the Mother Country to follow in the same course.

It is perfectly evident, it has been emphasised by Colonial statesman after Colonial statesman, that the preference which they at present give, which cannot be described as inconsiderable, is less than the preference which they would be prepared to give if they were to meet with any corresponding return on the part of the Mother Country. Therefore we must not estimate the value of the preference merely by the position as it is, but by the position as it might be. But do not let any of us under-estimate the importance of the preference as it is. It is a preference which in the case of Canada converted a ten years fall in British trade from £7,000,000 to £5,000,000 into a ten years rise from £5,000,000 to £13,000,000. Surely that is not a small matter. It is a preference which in four years has increased our imports into New Zealand by £3,000,000, by 40 per cent., while at the same time the corresponding imports from foreign countries have hardly increased at all.

These New Zealand figures are of the greatest possible moment. Here is this relatively immense increase of £3,000,000 in the importation of British goods into a comparatively small country within four or five years as compared with hardly any increase in the importation of foreign goods. What had been the case during previous years? During the previous eight or ten years, although the imports into New Zealand generally were increasing, the foreign imports increased over 100 per cent., while the increase of our imports was less than 50 per cent. Preference has had the effect of entirely altering the proportionate increase of foreign imports and British imports into the growing market of New Zealand. The noble Earl who sits in front of me said he was not aware that New Zealand had made any reduction in the duties on British goods. If so, it strengthens my argument. The more protectionist New Zealand is the more do the figures of New Zealand trade illustrate my main point, the importance of our having the lion's share in the purchases of the Colonies, even though they are protectionist. The New Zealand figures entirely dispose of the argument that preference in the market of a protectionist country is of no value.

What fills me with alarm is the indubitable fact that without reciprocity we cannot permanently enjoy these advantages. Let there be no question about this. You may say, If the Colonies give us this preference from motives of affection, why should they withdraw it because we do not respond? I am perfectly certain they do not wish to withdraw it, but they may be unable to help themselves. I have pointed out that the Colonies are great importers for the purpose of their own development; they are great buyers, and, like all other buyers, they have to look after markets in which they can sell in order to pay for the great quantity of goods which they require to buy. They are in a world in which, rightly or wrongly, if any nation wishes to have a position of vantage in the markets of others the only way in which it can get it is by a system of mutual concession. The market in which the Colonies are most desirous to have a position of vantage is the great British market. But if they cannot get a position of vantage there they must look for it elsewhere; and in looking for it elsewhere they are confronted by the fact that, in order to obtain a position of vantage in foreign markets, they are obliged to make concessions upon their tariffs which reduces the value of the preference which they have given to the Mother Country.

What has just happened between Canada and France has been most clearly explained by the noble duke. There is, however, one further point about it to which I cannot help calling attention. Canada did not start with the desire to give up as much of the British preference as she was ultimately forced to' give up. The offer with which Canada went to France was that Prance should take Canada's intermediate tariff, which would have given France a considerable advantage as compared with other foreign nations importing into Canada while still leaving a substantial preference to Great Britain. But in the course of the negotiations Canada was forced from that position, and she was driven to make a large number of special rates, which reduced almost to vanishing point the distance between the tariff given to France and the tariff enjoyed by Great Britain on many articles. There you have the process actually going on under your eyes—a Colony anxious to keep a prerogative position in her markets for the Mother Country and yet driven from that position by the necessity of bargaining to secure her own requirements as an exporter. There can be no doubt whatever of the desire of the Colonies, first and foremost, to have a position of vantage in the British market. If it is to be denied them they must try and get it somewhere, and in the process of fighting for it they will be obliged to throw over first one item and then another in their tariffs which are at present favourable to Great Britain. That process has already begun.

Canada has been driven from her original position and has been obliged not only to give France much more than she wished to give, having regard to her desire to maintain the benefit which she had accorded to this country, but also, by the operation of the most-favoured-nation clause, to extend the concessions made to France to a number of other countries. One or two more treaties like the treaty between France and Canada will have the effect of destroying our preferential advantages in the Canadian market altogether. It will be said, perhaps, on behalf of the Government, "We admit all this. Perhaps we do not go as far as you do. We do not estimate as highly as you do the value of Colonial preference. But we allow that it has a certain value. But what are we to do? How do you expect us to help in this matter?"

My Lords, before I answer that, let me point out once more all that is involved in this issue. The present Chancellor of the Exchequer has put in language of much greater eloquence than I can command the importance of developing the trade of the Empire by mutual concessions. He said— In Great Britain we have the greatest produce market in the world. We are the greatest purchasers of produce raised and manufactured outside our boundaries. A very large proportion of this produce can very well be raised in the Colonies, and any reasonable and workable plan that would tend to increase the proportion of that produce that is bought by us from the Colonies and by the Colonies from us, and from each other, must necessarily increase the resources of the Empire as a whole. A considerable part of the surplus population of the United Kingdom which now goes to foreign lands in search of a livelihood might then find it to its profit to pitch its tent somewhere under the flag, and the Empire would gain in riches, material, and men. We agree with our colonial comrades that all this is worth concerted effort, even if that effort at the outset costs us something. The federation of free commonwealths is worth making some sacrifice for. One never knows when its strength may be essential to the great cause of human freedom, and that is priceless. "Concerted effort"—"worth making some sacrifice for, even if it cost us something!" I will not ask what sacrifice are we making, because my firm conviction is that no sacrifice is required. But effort is required. What effort of any sort or kind has been made to preserve those great objects which are described in the passage which I have read, and which we see slipping from our grasp?

I suppose we shall be told that the only effort worth making, the only effort which could be productive of any great result, would be a tax upon food imported from foreign countries, from which tax food coming from the Colonies would be wholly or partially exempt. Now, I might take the point that a great deal can be done without imposing any fresh tax at all. I might point out that there was no answer given to the request addressed by the Colonial statesmen at the Conference to our Government to give Colonial producers some advantage in respect of the articles which we at present tax. But I prefer to face the matter squarely and to say that from my point of view the imposition of a 2s. a quarter duty on corn and corresponding low duties on other articles of food imported from foreign countries would be an extraordinarily low price to pay for a position of permanent vantage for British merchants and British workmen in supplying the needs of the other portions of the Empire, with all the enormous industrial future which in store for them.

If it is contended that such a duty would fall heavily on any particular class of the population, it is perfectly easy to meet that difficulty by the readjustment of our own existing taxes. As a nation we should lose nothing whatever by the imposition of such a tax. We should have so much more revenue, which we could use either for any purposes for which we required it, or for making equivalent reductions in other taxes. But as a nation we should gain the immense advantage of the enhanced trade which would ensue.

So much for what I may call the material, the economic point, whether we can afford to introduce taxes in this country which would enable us to give a preference to the Colonies and so retain those advantages which are slipping from us. But there is another point dwelt on with great force by the noble Earl which I may call the political and moral point. It is said that if we adopt a system of preferential trade throughout the Empire it will lead to perpetual disputes and ill-feeling, and that it will tend to separate us rather than to bind us together. I believe it is the universal experience of mankind that the profitable exchange of goods between one country and another is one of the influences most tending to amity between those countries. All history bears it out. The system we advocate is a sytsem which has for its principal object the increase of a mutually profitable interchange of goods between this country and the other dominions of the Crown. Why should the influence which increase of trade has always exercised be reversed in this particular instance? Will not the very fact of our having an increased interest in the trade of the Colonies and their having an increased interest in ours of itself tend to closer relationships, rather than to the reverse?

But, it may be said, we shall fight about the terms. No, we shall not fight about the terms, if we grasp the true principle of preference which I have, however feebly, tried to explain. There might be serious quarrels arising over a universal free-trade system within the Empire, If the nascent industries of any portion of the Empire were to find themselves crushed by dumping from other parts which were industrially more advanced, I can quite understand that that would lead to ill-feeling and to a disposition to rebel against the general system. But as long as every part of the Empire is allowed to exercise the greatest freedom in the formation of its tariff, in its own interest, and for the development of its own trade, how can it possibly lead to ill-feeling that in that trade which is left open for importation it should be dealing rather with other portions of the Empire than with foreign countries? Does that leave room for any cause of quarrel whatsoever? I fail entirely to understand how it can be contended that it would do so.

There is no doubt a possibility that pressure may be put from time to time upon Colonial Governments to protect their traders even more than they do at present against English manufactures, it would be regrettable if that were to take place. But even if that pressure was yielded to, it would not necessarily destroy the system of preference; indeed, it would not necessarily even impair it, because they can do what Australia has done, and what I think has been very unreasonably criticised. If they want to protect their own goods more against English competition they can raise their duties. It would be very unfortunate, but as long as, whatever duties they impose, they still differentiate between us and the foreigner, we shall still retain the advantage on which I have so strongly insisted—the advantage of a preferential position in what must be great markets, whatever the degree of protection.

Do not let us forget one other point, which has not been referred to at all in this discussion, namely, that the interest which we have in this matter is not only the development of our own trade, it is also the development of the trade of the Colonies. If we are cosmopolitans it does not matter whether we deal more with foreign countries or with our own Colonies. But if the Empire is to be regarded in any sense as a body politic, then surely next to the development of our own trade in this country it is of importance to us to develop the trade of our Colonies, and it should be reckoned a matter of the greatest interest to us to deal with them rather than with foreign nations. I do not, of course, undervalue our foreign trade, nor need it be at all injuriously affected by increase of trade with the Colonies. But what I wish to point out is that an increase of our trade with the Colonies is of greater value than an equal increase of our trade with foreign countries. Trade benefits both parties, and if it is trade within the Empire, the Empire enjoys a double benefit—the benefit to us and the benefit to those with whom we trade, whereas in trade outside our borders there is only one benefit. I should deeply regret if in anything I have said I seemed to overlook the importance of this aspect of the matter—the great importance of a system of preferential trade within the Empire from the point of view of developing those great new countries under the British Crown, rather than developing countries whose wealth does not add, as their wealth does, to the strength of the Empire as a whole.

Moved, "That the debate be adjourned."—(Lord Avebury.)

On Question, debate adjourned till to-morrow, the debate to have precedence of other business.