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HE COpiEECIAL POLICY
OF THE
BEITISH COLONIES
AND
THE McKINLEY TAEIFF
BY
EARLx GREY, K.G., G.C.M.G.
BY THE
^/
'";^'"-'
MACMILLAN AND CO.
AND NEW YORK
1892
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RiCHABD Clat and Sonb, Limitbo,
LONDON AND BUNOAT.
HCNRY MORSE STCrHENa
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9SC^
TO THE PEOPLE OF THE DOMINION OF
CANADA.
The subject of the following pages is one which I
regard as of extreme importance to the whole
British Empire, but I dedicate them to you because
I believe that the inhabitants of no other part of that
Empire would gain so much by adopting the policy
I have endeavoured to recommend as yourselves, or
would Buffey so much as you would do by clinging
to the opposite policy in the present state of your
affairs. Holding this opinion, I entreat you to give
at least your serious consideration to the arguments
I have advanced in this pamphlet for your rejecting
the policy of giving what is called " protection to
native industry " as being both opposed to common
sense and to the teaching of experience, and for
your adopting in its stead the policy of Free Trade.
I would also call your special attention to the
political as Avell as the economical advantages which
865884
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\^ :\ :••;•.•• •>to-'^fejE' -PEOPLE OF CANADA
I have endeavoured to show would be gained by
your taking this course.
My dedication to you of what I have written
against the policy of imposing *' protecting" duties
adopted by several British Colonies, and the appeal I
have made to you seriously to consider the argu-
ments I have brought forward, have been suggested
by the deep interest I have never ceased to take in
the welfare of Canada since it was my duty nearly
half a century ago to take an active part in the
management of its affairs as Secretary of State for
the Colonies, to which office I was appointed on the
formation of the administration of Lord J. Russell
in July 1846. One of the most pressing subjects the
new Government had to consider on coming into
power was the very unsatisfactory state of affairs in
Canada, and we came to the conclusion that in order
to secure the peace of the Colony it was necessary to
entrust its Government to a person of greater political
experience than Lord Cathcart, who had recently
been appointed to the office of Governor-General,
principally, as we had reason to believe, in order
to unite the chief civil and military authority in
the hands of the General commanding the troops
while the dispute with the United States on. the
Oregon question was still unsettled. Accordingly,
with the concurrence of my colleagues, I recom-
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TO THE PEOPLE OF CANADA 5
mended Lord Elgin to the Queen for the oflSce
of Governor-General, though he was at that time
personally unknown to me, and though during the
short time he sat in the House of Commons he acted
with the party opposed to our own, because the manner
in which he had conducted the government of Jamaica
pointed him out as being singularly well qualified for
the arduous post he was selected to fill Before he
proceeded to Canada to assume its duties we had
ample opportunity for discussing the principles on
which he ought to act, and it was satisfactory to find
that our views on the subject were the same. While
I continued in office I kept up a constant confidential
correspondence with him on all his measures in
addition to that of a more public character, and in
Common with the other members of the Government
strenuously supported his policy against the attacks
made upon it in both Houses of Parliament. Few of
those who at this distance of time look back at th6
records of the proceedings I refer to will deny
the factious character of these attacks, which very
much increased the great difficulties he had to contend
with. By the sound judgment and firmness he dis-
played, he happily succeeded in surmounting them,
so that on the fall of the administration we left
Canada in all respects in a far better condition than
we had found it.
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6 TO THE PEOPLE OF CANADA
In 1846 extreme discontent was manifested by a
large part of the population. In the beginning of 1 8 5 2
their affections, which had appeared to be hopelessly
alienated, had been regained, and all classes joined in
evincing their attachment to the British Crown and
to the institutions under which they lived ; the hate-
ful animosities and rancour which had been created
by civil war and differences of national origin had
almost disappeared, and the party divisions which
still existed were not greater than those usually to
be found in all free governments. A system of con-
stitutional government copied from our oWn had also
been brought into full operation, and was universally
acquiesced in. An equally marked improvement had
taken place in the material prosperity of the Province,
as was shown by the fact that its credit in the London
Stock Exchange had risen from a somewhat low level,
and was fully as high as that of the United States.
I will only add that I beg you to believe me your
very sincere and earnest friend and well-wisher,
Grey.
March^ 1892.
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THE COMMERCIAL POLICY OF THE
BRITISH COLONIES
AND THE McKINLEY TARIFF
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THE COMMERCIAL POLICY OF THE BRITISH
COLONIES AND THE McKINLEY TARIFF.
The greater part of the following pages were written
with a view to their being published in the Nineteenth
Century for February as a sequel to an article I had
contributed to that Eeview for the preceding month,
but it was found to be impossible that they could be
published in that manner, as what I had written with
regard to the commercial policy adopted by the
British Colonies far exceeded the length to which
articles in the Eeview are necessarily restricted.
Believing, however, as I do, that the policy adopted
by these Colonies has been highly injurious to them-
selves as well as to the whole British Empire, and
that its essentially erroneous character has not as yet
been adequately exposed, I have determined to cor-
rect and expand what I had intended for the Eeview
and publish it as a pamphlet. I do not forget that
pamphlets but rarely have much effect on public
opinion, but in this case the faults and the evil
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10 THE COMMERCIAL POLICY OF THE BRITISH
effects of the commercial policy which has been
pursued appear to me to be so clear, and the ad-
vantages that would result from abandoning it to be
so certain, that I am induced to do what little I can
to call public attention to a subject I regard as one of
high importance which has not yet received as much
consideration as it deserves. It is of special im-
portance at the present time from its direct bearing
on the question the Imperial and Colonial Govern-
ments have now to deal with as to the action it would
be most expedient for them to take with regard to the
recent adoption of the McKinley tariff by the United
States.
In order to make the following remarks more easily
intelligible, I will begin them by stating that my
chief object in the article in the Nineteenth Century
for January, to which they are meant to be a sequel,
was to recall to public recollection some of the main
arguments now seemingly almost forgotten, by which
in the great struggle of half a century ago the
advocates of Free Trade urged the adoption of this
policy as the best and surest means of relieving the
nation from the financial and industrial difficulties it
was labouring under when this struggle began. I
further pointed out that these arguments eventually
convinced both Sir R Peel, who had been the ablest
supporter of a protectionist policy, and also the great
majority of the nation, that the policy of the free
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COLONIES AND THE MoKINLEY TARIFF 11
traders ought to be accepted, and that under this
policy the trade and industry of the country had
flourished beyond all former experience, and beyond
the expectations of the most sanguine free traders.
In one respect I admitted that these expectations
had been disappointed since the example of this
country had not had the eflfect that had been
anticipated in leading other countries to adopt
a commercial policy of the same character as that
which had here proved so successful. This failure
however, I contended, was to be accounted for by the
fact that one of the most important principles of our
commercial policy of 1846 was practically abandoned
when a bargain was made with France by the treaty
of 1860 for alterations in the customs duties levied by
the two nations on each other's produce in direct
violation of the rule previously acted upon that our
duties on imports were to be imposed for revenue
only, and that their amount was to be determined
solely by a consideration of what was best for our own
financial interests without reference to the terms on
which foreign countries admitted British goods to
their markets. I gave reasons, of which I believe the
force cannot be successfully disputed, for holding that
the violation of this rule by the treaty with France of
1860 had been a great mistake, and had contributed
more than any other single cause to create a belief in
other nations that this country had ceased to have
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12 THE COMMERCIAL POLICY OP THE BRITISH
the same confidence it had formerly professed in its
commercial policy of 1846, and to produce that
general reaction of foreign opinion in favour of the
opposite policy of protection which has undoubtedly
taken place since I860, and has made almost all com-
mercial nations unwilling to admit foreign produce to
their markets except on the condition of what is called
** reciprocity/* From this recapitulation of the con-
clusions on the subject of commercial policy which I
sought to establish in the Nineteenth Century for
January, it may be observed that in the article re-
ferred to I confined my attention almost entirely to
the effect in the United Kingdom of the changes
made in this policy since the beginning of 1846. I
will now endeavour to show that the system of free
trade adopted in that year proved beneficial to the
whole British Empire, and that the subsequent entire
abandonment by some of our principal CJolonies
of this policy in order to adopt one of protection has
caused much more serious evils than even the mistake
made by the British Parliament and Government in
1860.
In the earliest days of the establishment of British
Colonies it was held that the main advantage to be
derived from possessing them consisted in the trade
we could carry on with them, and that to secure this
advantage it was necessary to make them conform to
the policy of the mother-country in all that relates to
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COLONIES AND THE McKINLEY TARIFF 13
trMe. They ^^re aqcordingly required to subii(ut for
its benefit to severe restrictions on their trade with
the rest of the world, which were b, great obstacle to
their industrial prosperity. After the American
revolution and in the early part of the present
century the restrictions on colonial trade by Imperial
legislation were much diminished, but they continued
to be no slight obstacle to its development up to the
time when Parliament adopted the policy of Free
Trade. But though these restrictions had originally
been highly impolitic and vexatious, and continued to
be injurious so long as they retained any of their first
character, I cannot doubt that it was wise to insist
that the commercial policy of all the British
dominions should be conducted on one uniform
system, with a view to the general benefit of the
whole Empire, and that the Imperial Parliament
should retain in its own hands authority to decide
what that policy was to be. When the system of
Free Trade was adopted no question had ever been
raised as to its being right to maintain this authority
of Parliament (though on some occasions the wisdom
with which it was exercised was disputed), nor was it
imagined by any one that it was to be relinquished
because the new policy of relieving trade from
injurious restrictions was to be adopted. It was, on
the contrary, assumed by all parties as a matter of
course that the commercial policy of the Empire
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U THE COMMERCIAL POLICY OF THE BRITISH
would continue to regulate as heretofore all measures
relating to the trade of the Colonies. Accordingly
while they were relieved from highly inconvenient
regulations by the repeal of the Navigation Laws, and
from the obligation of giving artificial encouragement
to British trade by taxes on foreign goods, they were
deprived of the privilege they had enjoyed of having
some important articles of their produce admitted to
our markets at lower rates of duty than those charged
on the same articles when imported from foreign
countries. The Eoyal instructions which had for
many years forbidden the Governors of all Colonies
having representative legislatures from giving the
Boyal assent to any Acts passed by these legislatures
for imposing differential duties on goods imported
continued to be enforced, and in 1850 Parliament, in
extending the system of representative government
in the Australian Colonies, strictly prohibited the
imposition of any such duties by their legislatures.
By introducing these provisions into the Australian
Government Act, which gave large powers of taxation
to the legislatures. Parliament clearly manifested its
determination that allowing trade and industry to
flow in their natural channels, without being artifici-
ally diverted into others^ was to be the future policy of
the whole British Empire, and not merely that of the
United Kingdom.
The effect of thus relieving the Colonies from the
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COLONIES AND THE McKINLEY TARIFF 15
restrictions by which their trade and industry had
Deen previously hampered and misdirected was highly
satisfactory. In the first instance, the change of
system inevitably produced no little inconvenience
and alarm (though care was taken to mitigate the
inconvenience by allowing reasonable delay in bring-
ing the change into full operation) : but when these
temporary difficulties had passed away all the British
Colonies began to advance rapidly in prosperity, with
the exception of those which still continued to suffer
from the injudicious manner in which the inevitable
and righteous measure of abolishing slavery had been
accomplished some years before. Some even of the
former slave Colonies were showing that in spite
of the very faulty character of the Act of Emancipa-
tion, as well as of the loss of the monopoly formerly
granted to their sugar in the home market, they
were deriving real benefit from the greater freedom
which had been given to their trade. The absence of
any signs of similar improvement in others of the
sugar Colonies was partly at least owing to the
persistent opposition offered by the great body of
those interested in West Indian proi)erty to all the
measures of the Government, in the vain hope of thus
compelling it to restore the Protection against foreign
competition in the English market which colonial
sugar had formerly enjoyed. The planters failed in
their real object of extorting that concession from
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16 THE COMMERCIAL POLICY OP THE BRITISH
the Government, but greatly to their own loss they
succeeded in preventing the adoption of most of the
measures that were contemplated for the purpose of
correcting, as far as was still possible, the evils
caused by the failure of the system of apprenticeship,
which had been relied upon for the means of keeping
up a supply of labour for the cultivation of sugar
when slavery was abolished.
With this partial exception the Britisl^ Colonies
showed by their rapid advance in wealth and pros-
perity that they, as well as the mother-country, had
gained largely by their being relieved from the re-
straint of laws passed for the purpose of artificially
directing their industry and trade into other channels
than those into which they would naturally flow if
left to themselves. But favourable as they were, the
results obtained by adopting the policy of Free Trade
did not satisfy the inhabitants of the most important
of the Colonies enjoying representative institutions.
Popular opinion in most of them began after a time
to be declared in favour of adopting the system of
" protecting native industry." Yielding to this popular
opinion, the Ministers who have held power in this
country during the last five-and-twenty or thirty
years have, by successive steps, allowed (unwisely as
I think) the commercial policy for our Colonies which
had previously been established by Parliament to be
completely reversed. This change has been eflFected
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COLONIES AND THE McKINLEY TARIFF 17
by allowing the assent of the Crown to be gi^en
(contrary to all former practice) to Bills passed by
the colonial legislatures for imposing duties on
imports avowedly for the purpose of protecting various
colonial goods against foreign, and often also against
British competition, and thus directly violating the
main principle of the Imperial policy of Free Trade.
By allowing these Acts to receive the Royal assent,
the Ministers of the Crown practically put an end to
the ancient and most important rule of our colonial
administration, that there should be one uniform
system of commercial policy for the whole of the
British dominions, which Parliament had plainly
signified its intention to maintain when the system of
Free Trade was substituted for that of Protection.
This surrender of authority by the Imperial
Grovernment, and the consequent abandonment
by several important British Colonies of the Free
Trade policy of the Empire in order to adopt that
of protection, has, I believe, been injurious both to
the whole Empire and to these Colonies. To the
Empire, besides having been injurious in another way
to which I shall presently refer, it has done serious
harm by confirming the unfortunate belief created by
the French treaty of 1860 that England had ceased
to have confidence in its policy of 1846. To thp
Colonies it has done much more serious injury.
Upon more than one occasion I have called attention
B
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18 THE COMMERCIAL POLICY OF THE BRITISH
to the fact that in the long and earnest controversy
on the question of Free Trade, which was carried on
in this country half a century ago, the conclusion was
at length established in the opinion of Parliament and
of a great majority of the nation, that the real effect
of protecting duties is to lay a heavy burden on the
public without producing any corresponding revenue,
and to diminish the productive power of labour and
capital in the nations which resort to them. I have
also shown that the effect produced by getting rid of
the protective duties formerly levied on many articles
of general consumption, in relieving British consumers
and at the same time increasing the revenue, has
afforded ample proof that Parliament was right in the
conclusion it came to. Still I do not deny that in
fully peopled countries, where the work of improve-
ment has been carried on for years, a want of
employment for labour and capital may sometimes
appear to exist, which affords plausible though (as I
am convinced) altogether unsound arguments in
favour of protecting duties. But in all our most
important Colonies even this excuse for the policy of
Protection cannot be offered ; in them the want is not
of sufficient means of employing labour and capital,
but of an adequate supply of both, to turn to account
the great natural advantages they possess. In such
a state of things it is surely a mistake, almost amount-
ing to insanity, to divert industry by artificial
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COLONIES AND THE McKINLEY TARIFF 19
regulations from the employment in which it would
be most productive, and to oflFer a premium at the
cost of the community to those who will undertake to
supply some of its wants by a greater expenditure of
money and toil in work at home than would be
sufficient to provide the means of paying for an equal
supply of the articles it requires if imported from
abroad. To see how contrary this is to common sense,
we have only to consider what would be the effect of
acting on the same principle in private life. Suppose,
for instance, that a farmer or manufacturer who could
find profitable employment for all the capital and
labour he could command in his proper business were
to grudge the money it would cost him to buy the
tools and machines he required to carry on his trade,
and were to resolve to make them for hitnself by
diverting several of his hands from their usual work
to this employment, though what he got in this
manner would really cost him much more than the
same things if he had bought them. He certainly,
would become, not richer, but poorer by his folly,
and would very likely end by getting into the
" Gazette." When a Colony possessing rich natural
resources, but insufficient means of turning them to
account, compels by protecting duties a larger
proportion of its capital and labour to be employed in
producing at home articles it wants than would be
required to procure au equal supply of them by
B 2
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20 THE COMMERCIAL POLICY OF THE BRITISH
importation, it acts precisely like the farmer or
manufacturer in the imaginary case I have put, and
like him must be made poorer by its folly.
Among various other bad consequences that have
followed from the surrender by Parliament of its
authority to maintain one uniform system of com-
mercial policy for the whole Empire and from the
consequent adoption by some Colonies of the system
of Protection, one of the worst is that of its having
tended to diminish, not only in these Colonies but
throughout the whole extent of the British dominions,
a sense of the community of interest which really
exists among all the various members of the Empire,
and which forms the only bond to be relied upon for
keeping it together.
Several of the protecting duties imposed by the
colonial legislatures have had the eflFect of prevent-
ing certain products of British industry from com-
peting on equal terms with similar goods produced
in the Colonies that have adopted tariffs containing
such provisions, and this has not unnaturally created
an angry feeling in the minds of merchants and
manufacturers in this country whose trade has been
thus impeded. They have considered the adoption
of such measures by the colonial legislatures to in-
dicate the existence in them and in the population they
represent of a selfish jealousy of their fellow-subjects
in the United Kingdom ; nor can it be denied that
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COLONIES AND THE McKINLEY TARIFF 21
it was by no means unreasonable to regard it in this
light. At the same time it has helped to foster, if
not to create, those narrow feelings of commercial
jealousy in the people of the Colonies it was here
believed to indicate. And it is not only between this
country and the Colonies but between the different
Colonies with each other that feelings of animosity
have been excited by the measures adopted in pursu-
ance of the policy of Protection. A few years ago
bitter (and just) complaints were made in Tasmania
of the conduct of their neighbours in Victoria in
imposing duties on the fruits of Tasmania to protect
their own growers from their competition. There
have been disputes of the same nature between
Victoria and New South Wales, and between New
South Wales and Queensland, and quite lately threats
at least of a tariff war between Canada and Newfound-
land. In this manner it is to be feared that feelings far
from favourable to the maintenance of a firm union of
all parts of the Empire must have been created both
in this country and in the Colonies. I am glad, however,
to believe that there is still a sincere desire that the
Empire should be kept together, for I have of late
observed with pleasure manifestations of a wish, both
in this country and in the Colonies, for a closer
union with each other. This I regard as a wholesome
reaction against a very opposite feeling, of which
I deeply deplored the existence more than forty
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32 THE COMMERCIAL POLICY OP THE BRITISH
years ago when it had been created and had gained
somewhat alanning strength owing to the imprudent
language and conduct of some leading politicians,
who seemed to consider the maintenance of the
integrity of the British Empire as a matter of little
moment, and to believe that the right object to be
aimed at in dealing with the Colonies was to reduce
to a minimum the expense we incurred on their
account, and our concern in their welfare.
I always held this to be a mistaken and mischievous
view of what is the real interest as well. as the duty of
the nation, and I shall have to revert to the subject and
give my reasons for so regarding it before I bring this
paper to a close. In the meantime I will only say
that I rejoice to think that after having been for
some years apparently accepted as correct by a large
number of our countrymen (including some of great
political influence), the opinion I condemn seems
now to be pretty generally repudiated, and to have
given place to a much sounder one. This change
of public feeling with regard to our Colonies affords
lust grounds for much, but not for unmixed,
satisfaction, since many of those who express the
greatest anxiety to give additional strength to the
ties that bind together the various members of the
British Empire propose that measures should be
resorted to for that object which I am convinced
would prove, if adopted, injurious instead of useful.
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COLONIES AND THE McKINLEY TARIFF 23
One of the suggestions I allude to has so direct a
beaxing on the subject of this pamphlet as to make it
proper that I should notice it somewhat fully, I
refer to the scheme which has been put forward for
seeking to establish a closer union between the
mother-country and the Colonies by means of some
change to be made in their commercial relations
with each other, which it is asserted would confer
great advantages on both, and which is to be eflfected
by the aid of a body calling itself "The United
Empire Trade League." This scheme is said to have
received many promises of support, but its promoters
have not yet laid before the public any dear and
full explanation either of the precise nature of the
change they desire to have made in our existing
commercial system, or of the manner in which this
change is expected to produce the promised advan-
tages, though the need for such an explanation was
very distinctly pointed out by Lord Salisbury to a
deputation from the League which waited upon him
some months ago. What comes nearest to the ex-
planation which it is so necessary for the promoters
of the scheme to give, if they have any confidence
in it, is contained in some resolutions quoted by
Colonel Howard Vincent, in a letter to the Times,^
as having been passed in several of the Colonies in
nearly the same terms, and expressing the opinion
^ Times of the 25th of September last.
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24 THE COMMERCIAL POLICY OP THE BRITISH
that — ** The principles advocated by the United
Empire Trade League, of preferential trading relations
between all parts of the British Empire, will be of
the highest individual and collective advantage."
These words seem to imply a desire to return to the
old system of seeking to encourage various branches,
both of our domestic and colonial industry, by pro-
tecting duties and artificial restrictions ; but though
it is difficult to attach any other meaning to the
words, it seems incredible that this can be that which
they are intended to bear. It is hardly to be
supposed that it can be seriously demanded that
the nation should revert to a system which was got
rid of nearly half a century ago, because it was found
to impose so heavy a burden on the Colonies as well
as on this country, and when the experience of many
years has now proved that its abolition has con-
ferred very great advantages on all the parties con-
cerned.
But if a return to the old system of colonial trade
is not what the promoters of the League desire, I am
at a loss even to form a guess as to any measures
that could be adopted in the direction to which they
point which would be of advantage to the Colonies.
It must be remembered that we raise a very large
revenue in this country by customs duties not one
of which is of a " protecting " character ; they are all
levied on articles which are either not produced at
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COLONIES AND THE MoKINLEY TAKIFP 26
home, like tea and tobacco, or if like spirits they are
produced at home, they are subject to a tax which
is regarded as equivalent to the duty on foreign
imported spirits, so that no advantage is given to the
home over the foreign producer; we cannot afford
to dispense with the revenue thus obtained, or
permit the productiveness of the duties by which it
is raised to be diminished, by allowing colonial
produce to be brought into our market charged with
a lower duty than that paid by our own and foreign
producers; still less could we consent to favour
colonial producers by charging duties from which they
should be exempt on the importation from foreign
countries of articles now admitted free,^
For these reasons it seems to be clear that no
attempt to draw closer the bonds of union between
^ Since these sentences were written I haye been told that it
has been suggested by some persons who dechire their adherence
to the policy of Free Trade, that it might be well worth making
even a considerable economic sacrifice for the purpose of creating
some stronger bond of union than now exists between this
country and the other dominions of the Crown. With this view
it has, I understand, been proposed that in all the British
dominions 3 or 5 per cent, should be added to the duties levied
by them on such imports as come from foreign countries, and
that the produce of this tax should be applied as a contribution
to the expense of maintaining the Boyal Navy. This scheme is
open to several obvious and fatal objections ; it is sufficient to
mention that it is essential for its success that it should be
adopted in all the British dominions, and the unanimous assent
to it of all the Colonies having representative institutions would
be little likely fco be obtained. If it could, the imposition of
such a tax in the Colonies where the Crown has the power of
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26 THE COMMERCIAL POLICY OF THE BBITISH
the several parts of the Empire by an alteration of
our commercial policy could possibly prove successful,
and I have no hesitation in expressing my firm
conviction that in order to attain this desirable object
we ought to look to measures in precisely the opposite
direction, and endeavour to induce the Colonies to
join with us in agaiix adopting " in its fuU integrity "
the Free Trade policy entered upon by the repeal
of the old Com Law in 1846, and completed and
successfully acted upon in the following years.
I am aware that owing to what has been done since
in a contrary sense, and to the present state of
colonial opinion, there is little or no chance that any
of our principal Colonies would now agree to give up
the policy of Protection, and as the Imperial Govern-
ment acquiesced in, if it did not encourage their
adopting it, their departing from it could not now be
insisted upon. Still, the benefit they would gain from
a change of policy, as well as the loss and injury they
really suffer from that which they are now pursuing,
can hardly fail to become by degrees understood, so
that the day would probably come (though it might
not be an early one) when they would not refuse to
abandon their present system of diverting industry
from its natural channels, if earnest efforts were made
legislation, and in India, would involve too flagrant a violation
of the fundamental principles of the policy of Free Trade to be
sanctioned by any Oovemment which is not prepared altogether
to abandon that policy.
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COLONIES AND THE McKINLEY TARIFF 27
by her Majesty's Ministers to bring about this
result
Though the Home Government and Parliament
have thrown away the right of insisting that all her
Majesty's dominions should conform to the com-
mercial policy of the Empire, it is probable that the
Colonies having representative governments (with
which alone there could be any difficulty) might be
led to recognize the expediency of doing so, and of
abandoning the system of Protection as injurious to
their true interest, by a judicious exercise of the
authority and legitimate influence of the Ministers of
the Crown. Unfortunately there is reason to fear
that this is not the use that will be made of their
power and influence, since they have not shown signs
of much earnestness in their support of the policy of
Free Trade. It is true they have disclaimed any wish
to alter the fiscal system of the United Kingdom in
the direction of a return towards Protection, and I
have no doubt that no attempt to do so will be made,
since it would meet with difficulties too great to be
encountered. But it is not enough that they should
abstain from taldng any retrograde steps; more is
required in order to obtain for the nation the full
benefits (which it has not as yet secured) of the policy
of Free Trade. For that purpose it is necessary that
the conduct and language of the Ministers to whom
the government of the country is entrusted should
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28 THE COMMERCIAL POLICY OF THE BRITISH
give unequivocal proof of their confidence in it, and
of their determination to maintain it in its full
integrity. They have been far from acting in this
spirit. Even with regard to our domestic trade they
have not declared with as little reserve as was to be
wished their full adherence to the principle formerly
acted upon by this country of refusing to discuss with
foreign nations the rates of duty to be charged on its
imports. With regard to the Colonies they have
gone much farther, and have even encouraged them
to look to the retention of their protecting duties, and
to negotiation with other States for mutual com-
mercial favours for the means of extending their
trade. They have also abstained from all attempts
to lead the colonial legislatures to conform to the
commercial policy of the Imperial Parliament even
when such attempts might have been made with
advantage.
This remark applies especially to Canada, where
the question has arisen whether any, and if so what,
steps should be taken to guard British North
America from the injury it is feared that it may
suflFer from the adoption by the United States of
the McKinley tariff. This question has necessarily
led to much discussion in the several provinces
of the Dominion, and is one of very great import-
ance not only to Canada but also to the Empire. It
is much to be regretted that this discusadon has been
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COLONIES AND THE McKINLEY TARIFF 29
carried on in Canada with more of party spirit than of
the calm reasoning which is required in order to come
to a wise decision as to the measures to be adopted
to promote the welfare of its people. During the
late general election in the Dominion, a fierce con-
troversy raged upon this subject, and I think
it must have appeared to most of those who, like
myself, watched its progress from a distance and free
from any party bias, that those who were engaged in
it on both sides have failed to give a suflBciently clear
explanation of the policy each has striven to recom-
mend to the electors, or to consider with enough care
what would be the effect of adopting it. Thus on one
side there have been frequent assertions of the
necessity of establishing complete freedom of trade
between the United States and Canada, but no
account has been given of the arrangements by which
it is proposed that this object should be carried into
effect, nor do the difficulties that would have to be
encountered in deciding upon such arrangements
appear to have been seriously considered. Yet these
difficulties would be great ; it is obvious that, if com-
plete freedom of trade is to be established between
British North America and the United States, the
same duties upon imports must be levied in both
territories, since, if they were not so, but higher duties
were levied in the one than in the other, goods would
be imported into that where the duties were lowest for
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aO THE OOMMEROIAL POLICY OF THE BRITISH
the purpose of being afterwards carried into the one
in which they were higher, which would thus lose part
both of the trade and of the revenue to which it
would be fairly entitled. Canada, therefore, in order
to obtain the perfectly free intercourse with the
United States which is demanded by one party, must
consent to have its commerce with the rest of the
world, including the United Kingdom, regulated by
the revenue law of the United States, in settling
which it has had no part, and which may at any
moment be altered by a Congress in which it has no
voice. The immediate effect of this would be to
subject the people of Canada to the heavy burden of
the new protective tariff of the United States, by
which many important articles of consumption are
subjected to extravagant duties, these being in some
cases intended to give artificial encouragement to
branches of industry not now carried on in the
Dominion, so that they would tax its inhabitants for
objects in which they have no interest. An oppres-
sive burden would in this manner be imposed on the
whole population of British North America, and a
great obstacle would be thrown in the way of the
extension of its trade with all other parts of the world
except the United States.
This is not the only difficulty that would be met
with in establishing a Commercial Union between
these States and Canada. Another very serious one
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COLONIES AND THE McKINLEY TARIFF 31
would arise in finding means for securing to each of
the parties concerned its fair share of the revenue
derived from the customs duties to which both would
be subjected. At present it is to be remembered that
the revenue derived from these duties in the United
States is appropriated by Congress (not by the State
legislatures) to purposes which concern the whole
Union, such as the maintenance of the army and navy,
the expense of the Federal Government and of the
diplomatic service, with various other charges of like
character. The several States which compose the
Union have not, as such, any control over the
expenditure of the large revenue levied from their
inhabitants by duties on imports. The formation of
a Commercial Union between the Dominion and the
United States would involve the necessity of paying
the money received for duty on goods consumed in
the Dominion into one fund with the customs duties
levied in the States, since many of the goods intended
for Canadian consumption would be sent tlurough
them, and pay duty in their ports, while on the other
hand some portion of the goods meant for consumption
in the States would reach them through the ports of
the Dominion, and pay duty there. As it would
obviously be impossible to distinguish at the ports of
entry of either territory on which side of the frontier
the goods there charged with duty would be consumed,
the whole would have to be included in the general
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32 THE COMMERCIAL POLICY OP THE BRITISH
receipts from customs duties by the United States,
and thus form part of the revenue of which the
appropriation rests with Congress. But the population
of the Dominion could not be asked to allow the
produce of taxes paid by them to be applied to objects
in which they have no interest, by an authority in
which they have no share. Justice w^ould require
that some arrangement should be made for placing at
the disposal of the Canadian Parliament such a pro-
portion of the total revenue derived from customs by
the whole Commercial Union as should fairly represent
the share borne by the inhabitants of British territory
of the burden of the taxes by which the revenue is
raised.
It would be no easy matter to devise an ar-
rangement of this nature which would be really fair
to both the parties concerned, and still more difficult
to suggest one that they would think so, and that
would not become a fruitful source of irritation and
disputes between two States politically independent
of each other, but joined together in this strange
commercial partnership. Even if it could be success-
fully started (which is not probable), it is scarcely
possible that such a partnership could be long carried
on in this manner, so that if the Commercial Union is
to be established and maintained, its leading to a
political union must be looked for. Some of the ad-
vocates of a Commercial Union, induding the most
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COLONIES AND THE McKINLEY TARIFF 83
energetic and consistent of their number, Professor
Goldwin Smith, do not shrink from avowing that
this would be the inevitable consequence of its
adoption, but consider this to be no reason for
rejecting the measure, but, on the contrary, an argu^
ment in its favour. This, however, there is reason to
hope is not the view taken of the subject by the
majority of those who have joined in the cry for
complete freedom of commercial intercourse between
the United States and the Dominion. What they
seem generally to desire is the entire removal of
obstacles to an unrestricted exchange between them-
selves and their neighbours beyond the frontier of
what they respectively produce, without sacrificing
their present position as forming part of the great
British Empire. I believe them to be mistaken in
supposing that their entering into a Commercial
Union with the great adjoining Republic is compatible
with their maintaining their political independence
and refusing a complete junction with it. But though
in this respect I believe them to be in error, I do not
doubt that they are right in wishing for a large
alteration and improvement in their trading relations
with their neighbours, and I will presently endeavour
to show that this might be eflFected in such a manner
as to secure for them all that is really required for
their benefit, without affecting their political position.
Before however I attempt to do this, I must first
c
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34 THE CX)MMBROIAL POLICY OF THE BRITISH
offer some observations both on the evil consequences
to Canada that might be expected to follow from its
consenting to be united politically as well as
commercially with the United States, and also on the
views as to what ought to be the commercial policy of
Canada which have been declared by the late Sir John
Macdonald and by the present leaders of the party of
which he was so long the chief.
If it were determined that what is now British
North America should become part of the adjoining
Republic, it is to be presumed that the provinces
which now constitute the Dominion would be formed
into two or three, or perhaps a greater number, of
separate States, each exercising the powers which are
reserved to the several States by the American con-
stitution, being as regards matters of general interest
under the authority of the Federal Government of
the Republic, Each of the new States would of
course send its due proportion of members to the two
Houses of Congress, and would be entitled to adopt
such a constitution for its own government as it might
think fit By this change British North America,
instead of forming as it now does a nation already
rising rapidly into importance, would fall back into
the condition fix>m which it has emerged, of being a
number of separate States having no organisation to
enable them to act in concert with each other, either
in carrying on great public works such as those which
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COLONIES AND THE McKINLEY TAEIFE* 35
have been already constructed, or in making postal
and other arrangements for their common benefit For
dealing with all subjects of this kind in which the
concurrence of more than one State is required, the
inhabitants of the new States formed out of the
Dominion would have to depend upon Congress and
the Federal Government at Washington, in which
their interests would command comparatively little
attention. At the same time, the burden of taxation
would be largely increased, as they would no longer
have the revenue from customs at their disposal, and
would probably have to provide for various expenses
which are now met from this source by direct
taxation. Their leading men, instead of having a
political career open to them among their friends and
neighbours in a government and legislature exercis-
ing large powers and dealing with important and
interesting affairs, would only have a field for the
exercise of their talents in the subordinate State
governments, or in the distant Federal Government
and in Congress at Washington, where they could
only expect to hold an insignificant position in one
or other of the parties which are there mainly oc-
cupied in the scramble for oflBces which is always
going on.
Such would be the probable, I might almost say
the certain, results that would follow to the people of
British North America if their connection with the
C 2
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36 THE COMMERCIAL POLICY OF THE BRITISH
Empire of which they form so important a part were
broken, in order that they might jom the giant
Republic across their frontier ; and another strong
reason remains to be noticed for their adhering to
what I rejoice to hear is the firm determination of the
great majority of their number to resist such a
change. Should what are now the several provinces
of the Canadian Dominion be formed into new States
of the American Union, their populations would be
involved in all its party contests, by having to vote
in the presidential elections and to return members to
Congress, and their whole system of government
would be assimilated to that of the older States of
the Union among which they would take their place.
But if the actual working of the American system of
government on the one hand is compared with that
of the Canadian Dominion on the other, as regards
the eflfects of each on the true welfare of the
populations which live under it, I think few impartial
and competent judges would hesitate in pronouncing
a decided opinion that the inhabitants of British
North America would be great losers by exchanging
their present system of government for a new one on
the American model. It would lead me too far from
my present subject to attempt a full explanation of
my reasons for holding this unfavourable opinion of
the American Government as it now exists, with the
various modifications it has undergone since the days
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COLONIES AND THE MoKINLEY TARIFF 37
of Washington ; but I may observe that in the
United States what is the very first want of every
civilised society, that of having the law fairly and
firmly administered, is by the showing of the
Americans themselves very imperfectly provided for.
The tribunals in the United States fail to command
public confidence, either in criminal or in civil cases.
Tragic proof of the want of this confidence in the
administration of criminal justice has been afforded
by the receint terrible scene in New Orleans, when a
number of Italians were put to death by a mob
without being allowed an opportunity of trying to
show their innocence of crimes imputed to them, and
of which as regards some of them at least there
seems to have been little if any evidence. The
language said to be often held by Americans about
their civil courts seems to imply a general belief that
suitors in them cannot rely upon them in having
justice done to them against wealthy and powerful
adversaries^ Both civil and criminal cases appear,
jfrom such accounts as I have seen, to be dealt with
more efficiently and more impartially by the Canadian
tribunals, and they command accordingly greater
public confidence. In the territory under their
jurisdiction men have never, so far as I am aware,
been put to death without trial by " Lynch '' — or, as
it might better be called, '* Mob '' — ^law, because the
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38 THE COMMERCIAL POLICY OF THE BRITISH
firm administration of the regular criminal law cannot
be relied on.^
In another respect the Government of Canada
seems to show a marked superiority over that of the
United States- Recent disclosures have proved that
the Dominion has not escaped what has been the bane
of free governments in all ages, the use of corruption
in one or more of its innumerable forms for the
purpose of obtaining political power. But though the
abuses of which the existence has been brought to
light by the late inquiry of the Dominion Parliament
are very grave, they do not indicate such a general
and deep demoralisation of the population, by the
habitual use of corrupt influence in party contests, as
that which has been produced in the United States
by the presidential elections, since they have been
conducted on the principle that " to the victors belong
the spoils." This maxim, which was first proclaimed
some half century ago, has since been very generally
acted upon, and it seems to be now recognised as
part of the regular system of the American constitution,
that the transfer of power from one political party to
another by the result of a presidential election should
be followed by a corresponding transfer of the offices
^ An article in the FfjrinvghtLy Eeview for January hj Mr. W.
Boberts on the administration of justice in America shows that
the evil is far greater than I had imagined to be possible when
the above was written.
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COLONIES AND THE McKINLEY TARIFF 39
of the Federal Government — the lowest as well as
the highest — ^from one set of men to another. This
practice, which if I am not mistaken is entirely
opposed to that which prevailed in the earlier years
of the American Union, has tended greatly to increase
the bitterness of party contests, by giving a large
proportion of the whole people a strong pecuniary
interest in the result of every presidential election,
which practically determines for the ensuing four
years whether the whole body of the civil servants
of the Federal Government shall be taken from one
party or from the other. It tends also to encourage
grave abuses in the conduct of these elections, since
when the battle has been won, and the "spoils"
according to the present practice have to be divided
amongst the " victors," the best shares in the booty
will naturally be assigned to those who have been
most active and successful (which unfortunately
generally means the most unscrupulous) in their
endeavours to secure it. Thus the majority of those
who fill offices in the public service under the Federal
Government may be expected to be extreme partisans,
who have earned their places by the zeal they have
shown in the election of the President by whose
authority these places have been given to them.
From men thus appointed, and who cannot reckon
upon holding their offices for more than four years,
it would be unreasonable to look for such an able or
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40 THE COMMERCIAL POLICY OF THE BRITISH
such an honest discharge of their duty to the public
as in this country we confidently rely upon obtaining
from a body of experienced public servants who know
that they practically hold their situations during good
behaviour, and that unless they forfeit them by mis-
conduct they will be allowed to retain them until
they can retire upon the pensions to which in due
time they will be entitled. Under the very diflferent
system which prevails in the United States, the civil
servants, by whose aid the Ministers at the head of
the various departments of the Government carry on
its business, have not an opportunity of gaining that
knowledge and experience which enables the perma-
nent members of our public departments to render
such invaluable assistance in managing the affairs of
the nation, nor have they the powerful motive for
abstaining from misconduct which is created by a
knowledge that it will endanger their continuing to
enjoy a secure provision for their lives. Instead of
this the holders of subordinate offices in the public
service of the United States are under a strong tempta-
tion to make the most of any opportunities their
probably short tenure of their offices may afford of
enriching themselves by improper means. We cannot,
therefore, be surprised at finding, from time to time,
in the intelligence which reaches us from America,
indications that in the United States it is much less
rare than in this country to hear of scandals as to
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COLONIES AND THE McKINLEY TARIFF 41
dishonest gains alleged to have been made by those
entrusted with the details of public business. The
Republic must suffer greatly, both in its pecuniary and
its moral interests, from the existence of such abuses^
but though there appears to be a strong sense of the
serious character of the evil among many of the best
men in America, no effectual steps have yet been
taken to abate it The public in general, it must be
presumed, has no wish for a reform in this matter,
since it might easily be effected by a very simple law,
but Congress has not been asked to pass one.
In maintaining that the Canadian people have now
the advantage of living under a better system of
Government than that under which they would be
placed if they were to join the Republic of the United
States, I do not mean to deny that Professor Ooldwin
Smith, in his late work on Canada and the Canadian
question, has proved that there are great faults in the
present constitution of the recently formed Dominion,
and that it is not unreasonable to attribute to these
faults the gross abuses that are shown to have taken
place in its expenditure on public works. Admitting,
as I must do, the force of the Professor's arguments
as to the faults of the present constitution of the
Canadian Government and their tendency to encourage
political corruption, I entirely dissent from his con-
clusion that the Dominion ought to be broken up and
its territory added as new States to the American
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42 THE COMMERCIAL POLICY OF THE BRITISH
Union. On the contrary, I believe that by taking
this course the population of that territory would
exchange whatever evils they are now suflFering from
defects in the constitution and practice of their
Government for greater evils of the same kind, that
they derive great advantage from their union with
each other and with the British Empire, and that what
they ought to endeavour to accomplish is not a total
change in their existing political condition, but such a
reform in their institutions as may be found necessary
in order to correct their faults without abandoning
what is really good in them. And it is highly satis-
factory to observe that the people of the Dominion
seem to have exhibited with reference to the abuses
lately discovered in the management of their affairs
an earnest desire to guard against the recurrence of
similar abuses in the time to come, very different from
the apathy of their neighbours in submitting to the
far more serious evils which notoriously arise from the
prevalence of corruption, especially with reference to
the presidential elections. It is earnestly to be hoped
that judicious steps may be taken to accomplish the
reform which has been shown to be so much needed
in the Dominion, and I will venture to suggest that it
deserves to be considered whether it would not be
advisable for that purpose to appoint a small commis-
sion of able men, as free as possible from party bias,
to inquire what are the real defects in the constitution
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COLONIES AND THE MoKINLEY TARIFF 43
of the Government of the Dominion and in its
practical working, and to report to the Canadian
Parliament their opinion as to how the faults they
may discover might be best corrected.
Having thus endeavoured to explain the objections
which may be urged, on political as well as on
economical grounds, to the commercial imion with
the United States which the Opposition party in
Canada has recommended as the best mode of guard-
ing the Dominion from the evils it is considered likely
to suflFer from the new tariflF of the American Re-
public, I must now attempt to show that what has
been proposed by the Ministerial party for the same
purpose is open to equal or nearly equal objections*
In order rightly to understand these objections it is
necessary to bear in mind what had been the previous
conmiercial policy of the Canadian Government*
When, several years ago, the late Sir J. Macdonald
induced the Canadian Parliament to impose high
protecting duties on various imports, he defended
this measure not only because he held it to be de-
sirable to encourage in this manner certain branches
of Canadian industry, but also on the further
ground that these duties were required in order
to provide for the charge which would be thrown on
the Treasury of the Dominion by the construction of
the great public works he contemplated. These
works, and especially the railway which was to create
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44 THE COMMERCIAL POLICY OF THE BRITIBH
a new line of communication between the Atlantic
and Pacific Oceans, would, he contended, confer great
advantages on all the provinces of the Dominion by
extending their trade and drawing closer their union
with each other and with the British Empire ; but
the cost at which these advantages could be obtained
would necessarily be large, and could only be con-
veniently provided for in the manner he proposed.
Though Professor Gtoldwin Smith has advanced
arguments, which cannot be denied to have much
weight, against the policy of imposing so heavy a
pecuniary charge on the Dominion by constructing
these works, the benefit already derived from them,
and the prospect of still greater benefit likely to arise
from them hereafter, lead me now to believe (contrary
to what was my original opinion) that on the whole
the measure has turned out to be a wise one, though
I admit that there is still room for doubt on the
subject. Assuming it to have been wise to incur the
expenditure, I do not dispute that Sir J. Macdonald
was right in considering that the imposition of
customs duties afforded the most convenient mode of
providing the increase of revenue required to meet it,
but I hold that a great and unfortunate mistake was
committed when it was determined that these duties
should be of a protective character. When the policy
of Free Trade was adopted in this country, it was not
contemplated that customs duties should be given up
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COLONIES AND THE McKINLEY TAKIFF 45
as an important source of revenue ; on the contrary^
it was one of the chief arguments of the early advo-
cates of the abolition of Protection, that relieving
the country from those duties which imposed a
burden on the public without bringing in a corre-
sponding amount of revenue would tend to increase
the amount received from the duties that were
retained. It was held that the essential principle of
the Free Trade policy consisted in abstaining from
all attempts to divert industry from its natural
channels, and in imposing taxes solely for revenue,
in such a manner as to take as little money as
possible beyond what was paid into the Treasury out
of the pockets of consumers. This principle, it was
also held, would be fully maintained by acting upon
the rule that whenever duties were imposed on the
importation of articles of consumption, these articles
when produced at home should be subject to the
same amount of taxation. This rule has always been
adhered to in this country since Free Trade was
adopted as the national policy. If the same rule had
been followed by Sir J. Macdonald, and if he had
advised the Canadian Parliament to raise the
additional revenue that was required for public
works by imposing moderate customs duties of such
a character as to avoid inflicting any needless burden
on the consumers, the money that was wanted might
have been got with far less pressure on the popula-
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46 THE COMMERCIAL POLICY OF THE BRITISH
tion than was caused by the protecting duties which
were resorted to.
It is probable that his being already so deeply
committed to what I have endeavoured to show was a
mistaken commercial policy that induced Sir J. Mac-
donald to adopt the course he did, when the question
arose as to how the adoption of the McKinley tariff
by the United States ought to be met by Canada.
If I understand correctly such of his speeches on this
question as I have had an opportunity of reading,
I find that while he denounced the project of his
opponents to seek, either by a complete or only a
commercial union with the United States, relief for
the Dominion from the difficulties it was expected to
suffer from this adoption of the McKinley tariff, he
had himself nothing to suggest for that purpose
except that an attempt should be made to enter into
an agreement with the United States, by which each
of the two Governments, while maintaining its general
system of granting protection to native industry,
should allow the free admission to its markets of
certain imports from the other on the principle of
reciprocity. For the success of this policy, to which
I believe the present Canadian Ministers adhere, it
would be necessary not only that there should be a
disposition, of which there is no sign, on the part of
the Gk)vemment of the United States to come to a fair
arrangement with Canada on this principle, but also that
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COLONIES AND THE McKINLEY TARIFF 47
it should have the power of obtaining for it the sanc-
tion of Congress. The proceedings of that body on the
McKinley tariflF afford little ground for expecting that
its assent to a law for giving effect to such an agree-
ment would be easily or quickly obtained, more
especially as it is hard to see what inducements could
be offered to the United States for making commercial
concessions to Canada. It may, therefore, be con-
cluded that little or no hope of gaining any advantage
in the manner suggested by Sir J. Macdonald can be
reasonably entertained.
As any attempt to bring about an improvement of
the commercial relations of Canada with the United
States on the principle of reciprocity seems thus fore-
doomed to failure, and as the rival scheme of forming
a Commercial Union is not more likely to succeed,
there is surely good reason for seriously considering
whether it would not be far better for Canada to
follow the example of this country, by adopting the
system of Free Trade with the same completeness
that it was acted upon here during the first years
after the repeal of the old Com Law.
This is a question of such extreme importance to
the welfare not only of Canada, but also of the
British Empire, that, in the hope of obtaining for it
some of the attention it deserves, I will endeavour to
describe the advantages which I believe might be
confidently expected to follow from the change of
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48 THE COMMERCIAL POLICY OF THE BRITISH
policy I have suggested. Before I do so I must^
however, observe that if, contrary to what at present
appears to be likely, the Parliament of Canada should
be convinced of the expediency of the proposed
change, and should determine to adopt it, I think it
ought by some formal proceeding to record its reasons
for taking this important step, I do not know how
this could be more conveniently done than by its
voting resolutions declaring its views, and in order to
explain more clearly than I otherwise could the course
which I would suggest for its consideration, I venture
to give the following sketch of resolutions that might
be proposed : —
Resolved : (1) That the new tariff of the United
States will so materially i^ect the trade of Canada
with these States as to render it necessary very care-
fully to consider what measures it is in consequence
expedient to adopt to avert the injury which may
thus be inflicted on the Dominion ; (2) That, looking
to the whole course of the discussions in Congress
on the new tariff, and to the communications since
held with the Government of the United States by
the Imperial Government, and that of the Dominion,
there does not appear to be any reasonable ground
for expecting that the United States can be induced
to enter into a satisfactory arrangement for removing
or mitigating the new restrictions imposed on the
admission of Canadian produce to their markets ; (3)
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COLONIES AND THE McKINLEY TAEIFP 49
That this being the case, it is inexpedient that the
communications with the United States on this
subject which have abeady taken place should be
carried any further, and it would therefore be advis-
able that the Dominion of Canada should, without
reference to what may be done by the United States,
proceed at once to adopt such measures as may be
found most likely to promote its own welfare ; (4)
That with this view it is not expedient to impose new
duties on produce imported from the United States,
for the purpose of either excluding such produce from
the market of Canada or diminishing the amount
admitted, in retaliation for the increased restrictions
imposed by Congress on importations from Canada ;
(5) That the imposition of such retaliatory duties
would add to any loss which the new American tariff
may inflict upon Canada the further loss to its people
of the supplies which they now find it to be for their
advantage to draw from beyond their frontier, while
no inconvenience to Canada can result from con-
tinuing to receive them ; (6) That it is, therefore,
expedient that the Dominion, in order to avert any
damage which the recent measures of Congress might
inflict on its trade, should seek to create new openings
for that trade in other quarters ; (7) That for this
purpose it would be advisable to adopt the policy
successfully acted upon by the British Parliament by
abolishing, on the advice of Sir R Peel and succeed-
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50 THE COMMERCIAL POLICY OP THE BRITISH
ing Ministers, all the protecting duties formerly
charged on many imports into the United Kingdom,
and levying only such duties of customs as may be
required for raising revenue, and which do not
impose any unnecessary burden on consumers ; (8)
That the adoption of this policy by the British Par-
liament having proved to be the means of greatly
increasing the commerce of the United Kingdom and
the welfare of the population, by relieving them from
the burden of the former system of taxation, while it
has largely augmented the productiveness of those
duties on imports which are retained, it is expedient
that the present Canadian tariff should be revised so
as to make it conform in principle with the British
tariff; (9) That the above resolutions be com-
municated through the Governor-General to her
Majesty's Ministers, with a request that they will
instruct the British Minister at Washington to
intimate to the President of the United States that
it is not considered by the Imperial Government, or
by the Government of Canada, to be desirable that
the rates of duty to be charged in the United States
on imports from British territory, or in the British
dominions on imports from the United States, should
be made the subject of further discussion, or of any
treaty or engagement between the two nations.
Proceeding now to explain my reasons for holding
it to be certain that Canada would derive great
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COLONIES AND THE McKINLEY TARIFF 51
advantage from the adoption of the policy indicated
by these resolutions, I have in the first place to
remark that the damage the Dominion could pos-
sibly suffer from the enactment of the McKinley tariff
by the United States would be rendered exceedingly
slight by merely avoiding the blunder of seeking to
obtain a modification of the restrictions it has inflicted
on Canadian trade, either by imposing retaliatory
duties on American produce, or by entering into
negotiations with the Federal Government for the
reduction of the high duties now charged in the
United States on Canadian produce. For reasons
into which I need not now enter, I am convinced
that an attempt to obtain a modification of the
McKinley tariff by any such means would be a
great mistake, and if this is avoided Canada
would lose none of the benefit it now has in
drawing from the States supplies for some of the
wants of its population, and though the new restric-
tions of the McKinley tariff might interfere with the
easiest mode of paying for these supplies, by giving
Canadian produce in exchange for them, any incon-
venience thus occasioned must fall chiefly on the in-
habitants of the States, who are now deprived by
that tariff of what they had hitherto found to be the
best and cheapest means of obtaining some articles of
consumption they require. The merchants and money
dealers of Canada may be safely trusted to find the
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62 THE COMMERCIAL POLICY OP THE BRITISH
means of paying directly or indirectly for all that
may be purchased from the States for the use of the
Dominion. The farmers and others in Canada who
used to send a part of what they have to dispose of
to the United States will now (as we are told) be
deprived in a great measure of the market they have
found there, but other markets would be open to
them, and Canada is so rich in the various fields it
offers for the profitable employment of capital and
labour, that the worst that is likely to happen to those
who have looked to the United States for a market
for the produce of their industry is that they may
have to make some change in the kinds of business
to which they turn their attention.
Although I see no reason for apprehending that
Canada will suffer any serious damage from the
McKinley tariff, unless through some injudicious
action of its own Government, I do not doubt that
for a long time the people both of Canada and of the
United States have lost much by having been debarred
from free commercial intercourse with each other by
unwise restrictions, and that relieving their trade from
these artificial and mischievous hindrances imposed
upon it by the fiscal laws of both nations would be
one of the most valuable boons that could be conferred
upon them. If the Parliament of the Dominion
could be induced to abandon its present commercial
policy for one of Free Trade, a great step would be
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COLONIES AND THE MoKINLEY TARIFF 63
made towards ultimately attaining this desirable ob-
ject, as I shall presently endeavour to show ; but the
more immediate advantages to be expected £rom such
a change, and the urgent need there is for it, require
to be first considered. The fact that there is an
obvious and urgent need for an alteration of the pre-
sent fiscal and commercial system of the Dominion
has been proved by Sir R Cartwright in his exceed-
ingly able letter in the Economist of February 13,
1892, by evidence which seems quite conclusive ; and
the evils he describes as now existing are most serious.
His remarks on the connection there is between the
terrible political corruption which to the great grief
of its friends has been lately brought to light in
Canada especially demand much attention, and even
more is due to what he says as to the results of
the recent census, since with regard to these he is
speaking of matters of fact which cannot be disputed.
He shows that, notwithstanding the very large num-
ber of emigrants who have been received in Canada,
the increase of the population since the last census of
ten years ago falls short of what might have been
looked for from natural increase alone in a prosperous
and thriving country. The inference is inevitable,
that during these years the Dominion had not been
prospering as it ought to have done, and that very
many of its natives, as well as of the emigrants who
have reached its shores, have been unable to find in it
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54 THE COMMERCIAL POLICY OF THE BRITISH
homes in which they could enjoy such an amount of
welfare as to induce them to remain there. When we
consider what great natural resources and advantages
Canada possesses, it is difBcult to see how this fact can
be accounted for, except by assuming that there must
have been some great fault in the management of its
affairs which has prevented the population from being
as well off as they have a right to expect and that
many of them have in consequence sought elsewhere
for better means of living than Canada has offered.
We may also fairly infer that the fault in the
management of Canadian affairs must lie in the fiscal
and commercial policy that has been acted upon, since
there has been no faUure in maintaining order and
the security of person and property which usually
ensure prosperity to an industrious population. Why
the eminently industrious population of Canada has
not been more successful in reaching the prosperity of
which its many advantages held out a promise would
be inexplicable, were it not sufficiently accounted for
by the vicious system which, professing to give " pro-
tection to native industry," has really placed it under
conditions greatly diminishing its productive power.
Other facts to be gathered from the census and from
other sources of information afford further proof that
this is the true explanation of the progress of the
Dominion in the last ten years having disappointed
public expectation. Among these it is deserving of
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COLONIES AND THE McKINLEY TAKIFF 55
special consideration that whatever increase of popula-
tion has taken place in the Dominion has been mainly
in large towns, while in some agricultural districts the
number of the inhabitants has actually diminished.
Even in the rich lands of the North- West, where
great efforts have been made to encourage settlement,
it has been far from being extended as rapidly as was
looked for. The development of the mineral riches
of districts where they are said to abound does not
seem to be making greater progress than agriculture.
These are significant signs of what are the effects of
the present fiscal policy ; they appear to show that
neither agricultural nor mining industry is, under
present conditions, suflBciently remunerative to en-
courage the extension or the carrying on with spirit
and energy of these great branches of national in-
dustry. The simultaneous increase of population in
the towns, where the business of the protected trades
may be presumed to be principally conducted, seems
further to show that the burden of the taxes imposed
for the purpose of affording this protection presses
too heavily upon the industries which derive no bene-
fit from it, and thus causes too large a proportion of
the people, instead of bringing into cultivation the
fertile land open to them, or improving that already
cultivated, to resort to the towns in the hope of
finding there a better return for their industry in the
employments favoured by the existing fiscal laws.
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56 THE CX)MMERCIAL POLICY OF THE BKITISH
This result of the system of Protection could hardly
be regarded as favourable to the general and perman-
ent welfare of the inhabitants of the vast territory
included in the Dominion of Canada, even if it could
be proved, which is exceedingly doubtful, that those
engaged in the protected trades are really deriving
from them the profit they have been led to expect.
Already, if I am not misinformed, there have been
complaints of losses sustained by those engaged in
some of the protected trades in Canada, and that
there should have been such losses is quite in accord-
ance with the experience of other nations which have
adopted the policy of Protection. The reasons for
this are Very obvious: though protected trades are not
exposed to the free competition of foreigners, they
have to meet that of their own countrymen, and when
high protecting duties on certain articles hold out a
prospect of obtaining more than the average rate of
profit by producing them, there is generally a rush
into the business of competitors for a share of the
advantage, so that the rate of profit in the protected
trade is speedily brought down to the average rate in
other branches of business. It is often brought much
lower. Whenever there has been a miscalculation as
to the extent of the demand for any kind of protected
goods, and more have been produced than can be sold
without loss, no relief for the overcharged home
market can be obtained by exporting the surplus
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COLONIES AND THE McKINLEY TARIFF 57
goods to foreign countries, since the very fact that
they require Protection at home implies that they
could not meet the competition they would be exposed
to abroad. Hence it has, I believe, been generally
found that, in nations which have adopted the policy of
Protection, it has seldom or never succeeded in secur-
ing for protected branches of industry steady and
durable prosperity. One remarkable example of its
having failed to do so in our own country occurs to me.
When the manufacture of silk in this country was
protected by the extravagant duties formerly charged
on foreign silks, there were every few years most urgent
appeals to the public for subscriptions to relieve the
distressed Spitalfields weavers in the frequently recur-
ring times of bad trade.
Perhaps it may be said that these arguments to
prove that the policy of Protection has been injurious
to the prosperity of Canada must be fallacious, since
the United States have long acted on the same policy,
and have of late carried it still further than Canada,
and have nevertheless continued to enjoy industrial
prosperity. This fact cannot be denied, but it must
be remembered that the great American Republic
enjoys several special advantages which have prevented
it from suffering so much as it might otherwise have
done from the policy it has pursued. The American
Union possesses a vast territory, including a great
variety of climates, and consequently able to raise a
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68 THE COMMERCIAL POLICY OF THE BRITISH
great variety of different kinds of produce, some of
them (such as cotton and tobacco) of very great value,
and which it has peculiar facilities for cultivating.
There is absolute freedom of commerce between the
States, so that internal trade in exchanging their
produce with each other is carried on without obstruc-
tion, and almost supplies the place of foreign trade.
The Union has also an immense capital invested in
railways and industrial establishments of various kinds
on a very large scale, a very considerable proportion
of this capital having been drawn from this country
by loans. With all these advantages, it is not wonder-
ful that so energetic and clever a population as that
of the United States should have succeeded in raising
the nation to great wealth and prosperity in spite of
its unwise policy ; and though it is true that the nation
is in the enjoyment of great apparent prosperity, there
are clear signs that this prosperity is not so great as it
might have been under a different policy, and that it
does not extend so widely among the general body of
the working population as it ought. There are also
signs of which Americans would do well to take timely
notice, that at no distant time they may have to meet
a much more serious competition than they have yet
had to encounter in foreign markets for cotton and
tobacco. In addition to other countries which already
export both these valuable staples of American trade,
it is highly probable that in a few years tropical
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COLONIES AND THE McKINLEY TARIFF 69
Africa may enter largely into tlds field of production,
with its almost unlimited extent of rich soil adapted
for such cultivation, and with its millions of inhabit-
ants to whom its climate is congenial, and who have
been found neither indisposed to industry when they
have an assurance of reaping its fruits, nor incapable
of useful labour under skilful guidance. The African
producers of cotton and tobacco are therefore likely to
become very formidable rivals in the markets of the
world to growers in the United States, especially if the
latter continue to be hampered by the artificial diffi-
culties with which their industry is now encumbered.
It is notorious that the cost of living, except as
regards food, is very much higher in the United States
than in any other country in the world. House rent,
clothes, and almost all the comforts and luxuries of
life are exceedingly expensive, so that it is doubtful
whether labourers, except the very lowest of the
unskilled, are really as well off in spite of their nomin-
ally high wages in the United States as they are in
this country. We hear not unfrequently of English
and Scotch emigrants who have been so disappointed
in their hope of bettering their condition by leaving
their native country, as to return to it after an experi-
ence of the homes they have sought Probably these
cases would have been much more common if it were
not so mortifying to a man to acknowledge by coming
back that he had made a great mistake in emigrating^
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60 THE COMMERCIAL POLICY OF THE BRITISH
and, moreover, so difficult for him if he had given up
a good position here to recover it on his return,
I cannot, therefore, admit that the apparently con-
trary experience of the United States disproves the
truth of the conclusion I have endeavoured to establish,
that the unsatisfactory progress in prosperity made,
by Canada in the last ten years is mainly owing to
the unwise policy its Government has adopted with
regard to trade and finance. The arguments in favour
of that conclusion, both from reasoning and experience,
remain in my judgment entirely unshaken, and if so,
it follows that to abandon that policy for the opposite
one which was adopted with such remarkable success
by this country five-and-forty years ago is the right
course for the Dominion to pursue. Nor is there any
cause for alarm as to the distress which might for a
time be inflicted on those engaged in the branches of
industry now protected from competition. The new
impulse given to trade by the proposed change of
policy would add to the large field for the profitable
employment of labour and capital which Canada
possesses, and there would be little difficulty in
finding means for turning to good account whatever
amount of both might be driven from employments
which would cease to pay when deprived of artificial
assistance. The Parliament of Canada, if it should
follow the example set by the British Parliament in
adopting the Free Trade policy, would probably also
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COLONIES AND THE McKINLEY TARIFF 61
follow it by allowing reasonable time to those engaged
in protected trades to prepare for the change before the
new system was allowed to come into full operation.
In addition to the directly beneficial results which
I am convinced might be confidently reckoned upon
fix)m the adoption of the policy of Free Trade in
Canada, I have already expressed my opinion that
it might probably prove the means of ultimately
securing another most important advantage, by
establishing far greater freedom of commercial inter-
course than now exists between the Dominion and
the United States. No immediate reduction of the
duties levied in the United States on imports from
Canada can be looked for, but if Canada should adopt
a policy of Free Trade while the United States adhere
to one of eirtravagant Protection, it is impossible that
the diflference thus created in the position of the
population on the two sides of the frontier line should
not produce before long a marked difference in
their condition, which can hardly fail to lead to
changes which are at present little thought of. In
some descriptions of produce British North America
and the United States are competitors in neutral
markets, and the high cost of living in the United
States, in consequence of the price of so many
articles of consumption being raised by protecting
duties, must give an advantage in these markets over
American producers to rivals who are not subject to
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62 THE COMMERCIAL POLICY OP THE BRITISH
equal burdens. Hitherto producers in the United
States have suffered little in this way in competition
with those of Canada, because the latter have been
subject to burdens of the same character as those
inflicted on their rivals, though perhaps not to an
equal amount. But if Protection should be aban-
doned in Canada, the cost of living in the Dominion,
and that of raising there the produce which it has
to sell in competition with the like produce in the
United States in markets open to both, will be
reduced so that the Canadian seller would have an
advantage over the other. The enhanced cost, owing
to protecting duties in the United States, of materials
used in various trades would have a like effect, and
already it has been asserted that the high duties now
levied there on tinned plates will seriously raise the
price at which American traders will be able to sell
their canned fruits, and tend, therefore, to diminish
the number of their customers in favour of Canadian
produce.
Another result well worthy of consideration may
be expected to follow from the admission into the
Dominion, either duty free or subject only to a
moderate duty imposed for revenue, of the many
commodities charged under the McKinley tariff with
evtravagant duties when imported into the United
States. A great difference must thus be created
between the prices at which such commodities would
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COLONIES AND THE MoKINLEY TARIFF 63
be sold on the opposite sides of the long frontier
line which divides the territories of the two nations,
and it is not likely to be long before enterpris-
ing traders discover that a good profit may be
derived from setting up shops on British territory, in
places to which American customers might easily
resort to buy goods which are made artificially
expensive in their own country. One example of the
manner in which this m^y be done may be worth
mentioning. Some time ago there were accounts in
the newspapers of great distress inflicted on a large
number of workpeople in Vienna by the prohibitory
duty imposed by the McKinley tariff on mother-
of-pearl buttons. It appears that the business of
making these buttons for the American market has
been carried on largely in Austria, with much advan-
tage to those engaged in it, but that the new duty
will prevent their being sold for less than two or
three times their former price, and will effectually
stop their sale. If this statement is true (which I see
no reason to doubt), what is there to prevent traders
from importing these buttons into the British North
American territories (if they are there free from duty),
and selling them at the old price to American tailors
and dressmakers, and how could such customers be
prevented from buying these things where they can be
bought cheapest, and can be so easily carried across
the frontier? Of course this would be smuggling,
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64 THE COMMERCIAL POLICY OF THE BRITISH
which the Canadian Government ought not and I am
convinced would not encourage, but it would have no
right and no power to prevent Canadian traders from
oflfering cheap wares for sale in their own country, or
to forbid American customers from purchasing from
them what they want It is the business of the
American revenue oflBcers to prevent the introduction
of smuggled buttons or other goods across tiie
Canadian borders, a task which would become far
from a hopeftd one whenever Canada adopted a Free
Trade policy and the United States adhered to one of
Protection. The inconvenience and loss the American
Government would certainly suflfer from attempting
to maintain in its territory the existing scale of
prices for commodities under the McKinley tariff,
while a very much lower one was obtained imder
Free Trade on the other side of the Canadian frontier,
together with the disadvantages under which the
population of the United States would soon find out
that they were placed as compared to their neigh-
bours, whose industry was not encumbered by the
shackles of Protection, would in all probability
induce Congress before long to abandon its present
commercial policy, so far at least as to allow a far
freer intercourse between its own people and their
neighbours in British America than is now permitted.
This freer intercourse, which the Canadians so much
and so justly desire, would be far more likely to be
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COLONIES AND THE McKINLEY TARIFF 65
gained in this manner than by negotiation with
the Government of the United States, which both
the great political parties in Canada seem to look to
look as the only mode of obtaining it. The experi-
ence of the civilised world, and more especially since
the close of the great revolutionary war in the early
part of the present century, proves that negotiations
of this kind very seldom indeed lead to a satisfactory
result, and as I have shown, there are special reasons
for regarding any commercial negotiations between
the British and United States Governments as almost
sure to fail But if, without asking anjrthing in
return (for this is an essential part of the policy), the
Canadian Parliament were to set the example of
abolishing all duties on imports, except such moderate
ones as might be necessary for revenue, without exclud-
ing goods from the United States from admission
equally with those from elsewhere, there would be a
far better prospect of obtaining the desired object
than would be oflfered by negotiation.
Nor is this the only reason for preferring the course
I recommend. All that can be hoped from negotia-
tions, even if they should not prove as abortive as is
to be expected, is that they might possibly be the
means of removing some of the worst obstacles to
trade between the Dominion of Canada and its
Bepublican neighbours, while both adhered to their
policy of Protection. This would no doubt be a
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66 THJJ COMMERCIAL POLICY OP THE BBITISH
benefit to both parties as far as it went, but the
advantages thus gained would not be likely to be of
great importance, and would be insignificant as com-
pared to those which would be secured if Canada
should discard the system of Protection for the policy
of Free Trade, with the same success that a similar
change was made in this country, and if the eyes of
the people of the United States should thus be
opened to the heavy loss they really suffer by their
excluding from their markets so large a proportion of
the goods they might import with advantage from
foreign countries. That such a change of opinion in
the United States might follow from the adoption
of a Free Trade policy in Canada is not only possible,
but what I believe would most probably happen.
Already there are signs that the absurdity of the
McKinley tariff and the injury it inflicts on the
nation are beginning to be understood. As yet the
truth on this subject does not appear to be generally
accepted by those who have not had opportunities
of acquiring the knowledge necessary for forming a
sound judgment on the question, and who form the
great majority of the persons whose votes determine
the policy of the nation, and therefore no immediate
change in that policy can be looked for. But when
the opinion that the Free Trade policy is right is
already held by a large proportion of those compe-
tent to imderstand the question, and when its rejection
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COLONIES AND THE MoKINLEY TARIFF 67
is seen to lead to such manifest practical absurdities,
it is sure to penetrate by degrees into the minds of
a people who, though they may be uninstructed in
the doctrines of political economy, are highly in-
telligent, and little likely to be long prevented from
discovering that the fiscal system they have been
persuaded to sanction flagrantly violates not only the
principles of science but the plainest rules of common
sense; This discovery can hardly fail to be made in
the end, but it may probably be long delayed,
unless it should be hastened, as I have given my
reasons for believing that it would be, by Canada's
adoption of the policy of Free Trade.
If the abandonment of the system of Protection
in Canada should lead to such a change of opinion
in the United States as I anticipate, and if in con-
sequence freedom of trade should be established
throughout the whole extent of North America, few,
I think, will venture to deny that advantages of
the very highest importance would be conferred on all
its inhabitants, whether they live under the Imperial
British flag or under that of the Stars and Stripes.
Their character and circumstances, and the position
of the two territories, create, as Professor Goldwin
Smith has argued, so many common interests among
those who reside on opposite sides of the national
frontier, and such a need for free intercourse with
each other, that to impede such intercourse between
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68 THE COMMERCIAL POLICY OF THE BRITISH
them by artificial and needless obstacles is to commit a
folly as well as to inflict a serious injury upon both.
I heartily concur in this opinion of the Professor ; but
I must repeat my entire dissent from his conclusion
that the incorporation of British America in the
American Republic is therefore desirable, I hold, on the
contrary, that it is neither the only, nor by any means
the best, mode that could be adopted for removing the
obstacles that now impede the free intercourse which
ought to take place between them. If the customs
duties imposed by the two nations were confined to a
few moderate ones, not of a protective character,
charged upon articles of general consumption, in order
to raise what revenue might be required, and if these
duties were levied under judicious regulations they
would not practically interfere with that free inter-
course which ought to be maintained. Assuming that
a proper arrangement were made for this purpose, it
would be far better for both populations that each
should be left to manage its own affairs independently
of the other, than that they should be joined together
in a union which coidd not easily be carried on without
giving rise to embarrassing and irritating questions.
In the Australian Colonies, their having no close
neighbour like the United States with which their
commercial relations are of vital importance, renders
the abandonment of the policy of Protection a matter
of less urgent necessity than it is in Canada, but still
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COLONIES AND THE McKINLEY TARIFF 69
there can be no doubt of the evils it is bringing upon
them. Striking evidence that it is so is afforded by
the following telegram which appeared in the Times
of the 6th of February : —
'* Melbourne, Feb. 4.
" A deputation from the suburban coimcils having
represented to the Government that owing to the
scarcity of employment thousands of men are starving,
the Cabinet have admitted the seriousness of the
situation and have resolved to start works.
*' The revenue continues to fall, the decrease in the
seven months of the financial year amounting to
£400,000."
Such has been the result of a policy which professes
to have for its object the benefit of " native industry "
in a Colony so rich in natural resources as Victoria,
and where it is admitted that these resources are very
insufficiently made use of. Not only in ordinary
agriculture in sheep-farming, and in mining, but also
in various other kinds of production now either
altogether neglected or obtaining far less attention
than might be given to them with advantage, there is
ample room for the profitable employment of more
labour than is available. In a Colony thus richly
endowed no need could have arisen for the Govern-
ment to undertake the difficult and dangerous task of
providing artificial and eleemosynary employment for
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70 THE COMMERCIAL POLICY OF THE BRITISH
labourers but for tbe unwise imposition on many
articles of protecting duties whicb diminish both the
productive power of labour and the demand for what
it produces, as the ability of the community to
purchase is necessarily reduced by taxes of which the
burthen far exceeds the revenue they yield. The
economical difficulties now felt in Victoria are not,
however, due solely to the protectionist policy the
Colony has long pursued. The over-haste with which
it has pushed on public works and especially railways
by loans so large in proportion to its immediately
available resources, that they have at length led
capitalists in this country to decline for the present
lending the Colony more money for the same
purpose, and the general want of prudence manifested
by the legislature in managing its finances has no
doubt contributed to bring about the check to industry
which has caused the existing distress, and the disputes
of labourers with their employers must have had a
similar eSeet in even a greater degree. Making all
allowances for the concurrent operation of both these
disturbing influences on the labour market, the mis-
direction of industry by protecting duties must still
in my opinion be regarded as the main cause of that
unfortunate state of things desmbed in the telegram
I have quoted.
In the other Australian Colonies the policy of Pro-
tection has not, I believe, been carried to the same pitch
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COLONIES AND THE McKINLEY TARIFF 71
of extravagance as in Victoria, but it seems in all of
them to have more or less affected their financial
arrangements. Even in New South Wales, where till
the recent change in its Government the party pro-
fessing to be in favour of Free Trade has generally
been predominant, its principles have not been
thoroughly and consistently acted upon, and it appears
are now to be altogether discarded. The practical
effect of this policy of Protection in Australia, so far
as I can judge of it from the imperfect information
I possess, has been in strict accordance with the con-
clusion to which reasoning leads us, that the tendency
of protecting duties is not to advance but to
retard the progress in prosperity of the communities
which adopt them. To adhere to this policy must
therefore be regarded as a mistake, and as experience
has shown it to be unfavourable to the maintenance of
really cordial relations between the different members
of the Empire, it must also be regarded as arguing a
singular want of consistency in Colonies now much
occupied in a project of federation having for its pro-
fessed object to strengthen the bond which holds them
together.
With regard to this project of federation, I greatly
doubt whether it could be successfully carried into
effect, and whether, if it were, its operation might not
prove very different from what is intended ; but as this
is not a fit opportunity of entering into so large a
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72 THE COMMERCIAL POUCT OF THE BRITISH
question, I will only observe that even if it were
admitted to hold out as good a prospect of proving
useful as its promoters believe, still it can hardly be
supposed that its adoption could have much eifect in
creating a stronger sense in the various members of
which the British Empire is made up of their having
all a real interest in maintaining its integrity and
prosperity. But this is the all-important object to
be aimed at. Improvements in the organisation of
the Empire, however well devised they might be,
cannot avail to keep it together and to make it
flourish, unless the people who live in all its widely
scattered territories have a lively sense of their
having a real common interest in its permanence and
in its welfare.
Such a sense of their having a common interest
in the welfare of the Empire can only be kept alive
in the minds of those who belong to it by their ex-
perience of its benefits ; whatever therefore increases
these benefits and makes them more dear to those who
enjoy them must help to add to its security,
which must be impaired by whatever has a contrary
tendency. That their forming part of a great and
powerful Empire does confer real and important
advantages both on the United Kingdom and on all
its various dependencies seems clear £rom some very
obvious considerations. The security and considera-
tion in the world now enjoyed by them all greatly
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COLONIES AND THE McKlNLEY TARIFF 73
depend upon the fact of its being understood that a
wrong inflicted upon any part of the Empire will be
regarded as a wrong to the whole and be resented
accordingly. Even to the United Kingdom the
severance of its connection with the foreign dominions
of the Crown would imply a serious loss both of
moral and of material power, though these islands,
even if they stood alone, would still constitute a
powerful nation. To the Colonies the loss would be
fax greater ; even the strongest and most prosperous of
them has not yet attained to such strength as to be
able to rely upon being always able to protect itself
from injury, and we have only to look to what is
going on in the world around us to be convinced that
unprovoked injuries by strong to much weaker
nations, which were so common in ruder ages, are
even now by no means impossible. Every British
subject also, in whatever part of the world he
may happen to be, finds that his being entitled to
that character ensures to him a consideration and
respect for his rights which he could not otherwise
command. It is also a great advantage to him that
in every part of the Empire he finds himself at
home: Englishmen, Scotchmen, or Irishmen in
Canada, Australia, or any other Colony have all the
rights of colonists, who in like manner enjoy in the
United Kingdom the same rights as ourselves ; they
may sit in Parliament, and enter into any branch of the
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74 THE COMMERCIAL POLICY OF THE BRITISH
services of the State as freely as their fellow-subjects
natives of these islanda This close union between
them is useful to the people both of this country and
of the Colonies ; to the former it affords a much
needed field for enterprise and for emplojmient,
without giving up the power of returning to their
native land and to their relations when they have
acquired adequate means, or of establishing them-
selves permanently in a new home without the
estrangement from their old one and its associations
which would result from their becoming subjects
of an alien Government To the colonist it affords
similar advantages, with the additional one that it
tends to raise the general tone of the society in
which they live by adding to it either as temporary
sojourners or as permanent settlers educated natives
of the United Kingdom, bringing with them English
ideas and English habits of living.
To use whatever means they possess in order to
secure the continuance and the increase of these
great advantages now enjoyed by all the subjects of
the Queen from the maintenance of the Empire is the
obvious duty both of the Imperial Government which
has charge of its general interests, and of the Govern-
ments of those Colonies which are entrusted with the
management of their own affairs by representative
institutions. This duty will only be rightly performed
when the measures of all these Governments are wisely
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COLONIES AND THE McKINLEY TABIFF 75
directed to promote the general welfare of the whole
Empire, in no case betraying the influence of a selfish
desire to promote the separate interest of any one of
the communities composing it without considering
how it may affect the common good of them all. It
cannot be said of either the Imperial or the Colonial
Governments that they have been uniformly adminis-
tered in this spirit
The conduct of both shows, on the contrary, dear
signs of their having fsdled to appreciate as they ought
the importance of maintaining the integrity of the
Empire, and of acting for this purpose with a sincere
and judicious regard for the common interest A
careful consideration of the transactions of the last
forty y^rs would, as I believe, amply prove the truth
of this assertion, but I will not here attempt to
state my reasons for this belief I will content
myself with affirming my conviction that it is
correct, and also that nothing would teud so
much to improve the present state of feeling both
at home and in the colonies on this subject as
the adoption of the policy of Free Trade as that
of the whole British Empire, which would do far
more than the mere abandonment of Protection
by Canada to lead the United States to adopt the
same course. Should this result be brought about,
what would be gained by it for the welfare of the
world defies calculation. It would at once produce a
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76 THE COMMERCIAL POLICY OF THE BRITISH
great improvement in the commercial relations of the
United States with this country and with British
North America, and thus remove what may hereafter
prove to be serious causes of diflference between two
great English-speaking nations, and would give them
a strong common interest in maintaining the peace of
the world. The adoption of a Free Trade policy by
the two foremost of industrial and trading communities
would also before long render it difficult for other
nations to abstain £rom following their example,
and we might not imreasonably hope for the early
abolition of the noxious restrictions which now impede
the free intercourse of the various families of the
human race. The blessing that would thus be con-
ferred upon them all can hardly be over-estimated.
Commerce is evidently designed by Providence to be
a powerful instrument for promoting the welfare of
mankind. It is the means by which all the nations
of the earth, with their variety of climates and of
soils, and of fitness for carrying on different kinds of
industry should be enabled to exchange with each other
whatever of the innumerable articles that contribute
to the comfort and enjoyment of men each can pro-
duce best and most easily, and thus the abundance of
these things which every separate community can
obtain would be largely increased. Commerco^ in ren-
dering this great service to the peoples of the world,
ought also to dispel the idea so generally entertained by
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COLONIES AND THE McKINLEY TARIFF 77
them in the early stages of society, that strangers are
necessarily enemies, and should teach them that it is
the interest as well as the duty of all the different
families of the human race to act towards each other
with justice and as friends. Commerce ought to pro-
duce these beneficent results, but owing to the perver-
sity and selfishness of mankind it has only done so very
partially. In past times it has been too commonly
carried on for the mere purpose of getting gain by any
means by which it can be won, whether just or unjust,
and it is still far from having entirely ceased to be so.
Nations, under the hateful influence of commercial
jealousy, have acted towards each other in a manner
opposed alike to their own true interest and to the
plainest principles of religion. In their blind desire to
secure advantages for themselves without regard to the
claims or the welfare of others, they have assumed that
what another nation gained by selling them its goods
was lost by themselves, and to avert this imaginary loss
they have resorted to the system of protective duties
on imports from their neighbours, not understanding
that the only trade between nations which is really
and permanently beneficial is that which is profitable
to both parties.
In the history of the world since Europe emerged
from barbarism we find but too abundant proofs of the
evils which this spirit of selfishness has brought upon
civilised nations. It has been the fertile source of
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78 THE COMMERCIAL POLICY OF THE BRITISH
jealousies and animosities, sometimes even leading
directly or indirectly to war with all its horrors. The
general abandonment of the system of Protection and
the adoption of the policy of Free Trade would go far
towards checking the spirit of selfishness and of trading
jealousy, and towards improving not only the com-
mercial but the other relations of nations with each
other. Such a change would indeed be a happy one
for the world, and the Ministers who are entrusted
with the government of this country have it in their
power to assist in bringing it about To do so is a
worthy object for their efforts, but it is not by trying
to recommend a more liberal commercial policy to
other countries, or by pressing upon them imasked
advice, that good is likely to be done. Experience
proves that all action of this kind has the very opposite
effect &om that which it is intended to produce, and
that advice offered by this country to another as to
how it may best manage its affairs for its own interest .
is generally attributed to a selfish motive, and is
therefore seldom acted upon. It is by its example in
using customs duties solely for the purpose of revenue,
without reference to what duties may be imposed on
British goods by nations from which supplies of what
we want are received, and by returning avowedly and
completely to the policy successfully pursued firom
1846 to 1860, and accordingly strictly abstain-
ing from all interference or negotiation with foreign
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COLONIES AND THE McKINLEY TARIFF 79
Powers as to the duties they may impose on imports
from this country, that a powerful influence might,
I am persuaded, be exercised by our Government
on the course taken by other nations with regard
to trade.
THE END.
RIOHARD CLAT JJW SONS, UMttSD, LONDON AND BUNOAY.
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