Imperial defence and trade ..

MP-NRLF

ROYAL COLONIAL INSTITUTE MONOGRAPHS

IMPERIAL DEFENCE
AND TRADE

" The interaction, if any, between the economic interests of a State
and its foreign relations, with special reference to the question whether,
or how far, the self-governing States of the British Empire (with or without
a more centralised system of government than it now has) could co-operate
permanently for the purpose of defence without co-operating for the purpose
also of trade."

-
BY

FREDERICK A. KIRKPATRICK

(First Gold Medallist of the R.C.I.)

PUBLISHED BY

THE ROYAL COLONIAL INSTITUTE
NORTHUMBERLAND AVENUE, LONDON, W.C.

1914

INTRODUCTORY NOTE.

BY THE CHAIRMAN OF THE COUNCIL.

The accompanying monograph being the first of a special series,
the Council have desired me to insert this prefatory note of explanation.
A feeling had grown up that we were not doing as much as we might
to elucidate problems connected with the supreme object of the
Institute's existence. That object is, in the words of our Royal
Charter, " the preservation of a permanent union between the Mother
Country and the various parts of the British Empire ". Since 1882,
when the present Charter was granted, the belief has become fairly
general that in order to preserve a " permanent union " some changes
will have to be made in the present system of Empire governance,
and in recent years there has been a marked revival of practical
interest in this problem. It was represented to us that although for a
long time past scattered enthusiasts have been endeavouring to
investigate the conditions of closer union, and despite in later years
the extremely able work of those who have conducted the Round
Table, little had yet been done in the way of detached, unbiassed, and
scientific treatment of this problem in certain important aspects
which seemed to admit of being treated by that method to the
advantage of the cause.

Having agreed that the need existed and ought to be met, we
had next to choose between two alternative plans. Either we might
institute an open competition, offering a substantial reward of honour-
able recognition and money* as an inducement to competent persons
to undertake what must always be an exceedingly laborious form of
work. Or, we might seek out and pay competent persons, so far as
our financial resources might permit, to work on specified lines under
direct supervision. The former plan would have the merit, we thought,
of diffusing a wider interest in the study of these questions, and of
perhaps bringing to light individual talent which might otherwise
have remained unrecognised or been absorbed in work of a different
kind. But in favour of the other plan, if our finances would permit

* The Gold Medal is accompanied with a grant of 100 guineas and honorary
life fellowship^of the Institute. <

iv INTRODUCTORY NOTE.

it, there was the important consideration that the results would be
certain at least. If a medal competition failed to elicit any work
of the required standard, the effort would have been largely wasted.
There was the further point that access to all the best sources of
official and other information might be secured by our influence to
students working under our own authority in London ; whereas,
in respect of libraries and other opportunities, students working
privately at a distance from London would inevitably be handicapped.
To give one illustration : the theme of the present monograph might
have been further elucidated in a most useful manner by a careful
analysis of all the manifold matters which have actually engaged the
attention of the Foreign Office over a recent term of years, with a
view to considering how far any of them had involved interests common
to the United Kingdom and the Dominions. But the task of collating
at first hand material of that kind would obviously have been im-
practicable for any student living far from London.

We are glad, therefore, to feel that the risk which we consciously
took in choosing the former plan rather than the latter has been justified
by the first-fruit of the experiment. Eleven monographs were sent
in, comprising 7 from the United Kingdom (5 from London and
neighbourhood), 2 from Australia, and i each from Canada and
South Africa. Sir Charles Lucas and Sir Harry Wilson, who are
members of the Council, having kindly undertaken a preliminary
examination of the monographs, deemed that four of them were
deserving of further consideration by Lord Milner, who, though
exceptionally preoccupied at the time, had kindly consented to make
the award. In the result the three adjudicators concurred in assigning
the first place to this monograph, and expressed the opinion that it
was up to the high standard which we desired to establish for the
Gold Medal — a standard not so much of literary style as of philosophical
method. Accordingly Mr. Frederick A. Kirkpatrick, of Celbridge in
Ireland, becomes the first Gold Medallist of the Royal Colonial Institute.
It may be of interest to mention that the monograph which ranked
second came from Melbourne, while the third and fourth were from
the London area. The fourth, it may be added, was sent in by a lady,
a New Zealander by birth.

The particular subject was selected on account of the exceptional
prominence, during recent years, of certain proposals for the closer
commercial and defensive union of the Empire, some of which bad

INTRODUCTORY NOTE v

given rise to political controversy of an acute order, highly prejudicial
to their chance of receiving the unbiassed consideration which the
Institute would desire to secure for any policy professedly designed
to further the supreme object of its existence. In a memorandum
accompanying our announcement of the Theme, which appeared in
the Institute's monthly journal, UNITED EMPIRE (March, 1913), we
drew attention to certain features of the constitutional proposal put
forward by the Prime Minister of New Zealand at the Imperial
Conference of 1911, and of the speech made by the Prime Minister of
Canada on December 5th, 1912 (introducing the Naval Aid Bill), both
of which had attracted much attention at the time and were of a
kind to suggest the need of examining certain implied assumptions.
Our endeavour to identify and isolate the ultimate principle at issue
led us finally to frame the Theme in the form in which it appears on
the titlepage. Our public announcement of the purpose and conditions
of the competition included an emphatic notice that the work of
candidates would be judged " by the scientific value of the method
of inquiry adopted rather than by the political tendency of the
conclusions reached ". It was also notified that account would be
taken of the potential value of any accompanying appendices of
information to future students of the same subject ; the Council
reserving power to publish the whole or any part of the work of any
of the competitors.

(Signed) J. BEVAN EDWARDS,

Chairman of Council.

Royal Colonial Institute,
July, 1914.

CONTENTS.

>•

INTRODUCTION :

Analysis of the Theme . . . . . . . . . . i

Method of Enquiry . . . . . . . . . . . . 3

Preliminary Chapter . . . . 8

PART I. HISTORICAL EXAMPLES :

Chapter I. League of Achaea and of Lycia . . 13

Chapter II. The three Teutonic unions of provinces

and cities . . . . . . . . 15

Chapter III. The Germanic body . . . . . . 25

Chapter IV. Unions in British Countries . . . . 31

Chapter V. Attempts at Union in Spanish America 41

Chapter VI. Application of historical examples . . 44

PART II. TENDENCIES OF THE AGE :

Chapter VII. General tendencies . . . . . . 57

Chapter VIII. Existing links between Great Britain and
the British self-governing States . .

Chapter IX. Tendencies in Greater Britain
Chapter X. Recent co-operation for trade

APPENDICES :

I. Analysis of methods of commercial co-operation . , 89

II. Bibliography . . . . . . . . . . . . 107

INTRODUCTION.
ANALYSIS OF THE THEME.

For the sake of clear definition, this theme may be analysed into
four questions : —

1. " If any ..." Do the economic interests of a State
and its foreign relations interact upon one another ?

This question is briefly answered on pages 8-10.
The answer is Yes.

2. " The interaction between ..." In what way do eco-
nomic interests and foreign relations affect one another, with
special reference to Questions 3 and 4 ?

This question is far too large for separate treatment. But it is
partly involved in the discussion of Question 3, and thus pervades
the whole essay incidentally.

3. " Whether ..." Is permanent defensive co-operation
of the self-governing States possible without commercial co-
operation ?

This is the main theme of the essay.

4. " How far . . . ? " What degree of permanent defensive
co-operation is possible without commercial co-operation ?

Obviously the treatment of this question depends on the answer
to Question 3.

The thesis may seem also to involve the converse to Question 4,
namely the question : —

What degree or extent of commercial co-operation is involved
in permanent defensive co-operation ?

2 IMPERIAL DEFENCE AND TRADE.

But this question is not distinctly asked, although its treatment
is perhaps suggested, or rather permitted, by the opening words of
the thesis — " The Interaction. . . ." The main question concerns, first,
the possibility or impossibility of purely defensive co-operation, and,
secondly, the degree of purely defensive co-operation which may be
possible.

Thus the question is not solely or even primarily an economic
question. It is true that there is an economic question now before
the people of the United Kingdom, the question of their future fiscal
policy as affecting the welfare of the people of these islands. But
this economic question differs widely from the problem set in this
thesis, as is shown in the Appendix^ p. 89.

The question here stated is rather a political question in the widest
and most comprehensive sense of the word " political " ; it is a ques-
tion concerning the relations of these states with one another and
their attitude towards the rest of the world.

The bracketed words, " with or without a more centralised system
of Government," suggest a yet wider question, the comprehensive
problem of actual or possible forms and methods of political co-opera-
tion between the British self-governing States. It is quite impossible
to dissociate the immediate subject of the thesis — commercial co-
operation— from this comprehensive topic of combined administra-
tive action. For the problem of commercial co-operation is a part of
the problem of defensive co-operation ; and the problem of defensive
co-operation is a part of the general problem of political combination.
Thus, in discussing the question of commercial co-operation, it is
necessary to define clearly the existing links, and the methods of
common action. And any definition of these links and methods leads
inevitably to an examination of their significance, their tendency,
and their actual or probable development.

This close inter-connexion of the problem of political and com-
mercial co-operation applies also to other historical examples of
Union. Thus in Part L, which deals with past historical examples,
the general method of union is discussed in each case, as well as the
special problem of commercial co-operation.

On the other hand, it is clearly not the business of the essayist
to frame a Constitution for the British Empire. He must confine
himself to the actual working and probable development of insti-
tutions.

IMPERIAL DEFENCE AND TRADE. 3

DEFENSIVE NEEDS.

It is assumed throughout, that co-operation for purposes of
defence is desirable, since this is evidently a postulate underlying
the whole thesis.

PERMANENCE.

In adducing historical examples of permanent defensive union,
some definition of the word " permanent " is necessary. The word
" permanent " clearly applies to the French Monarchy which fell in
1792, to the Venetian oligarchy which collapsed in 1797, to the Holy
Roman Empire which was dissolved in 1806. The word does not
mean " everlasting " : it means " enduring throughout " or " enduring
to the end." Thus the word " permanent " is applicable to any
political arrangement which lasts until some fundamental change of
conditions removes the basis of its being. It is applicable to any
institution which lasts throughout an era, or which is only destroyed
by some great catastrophe or some epoch-making change. Thus
the Achaean League may be fairly described as permanent, although
it was finally dissolved by Roman conquest : so also the Lycian
League, which was undone by the spread of Imperial uniformity : so
also the German Hansa, which was broken up by fundamental changes
in the political life of Germany and in the conditions of trade through-
out the world.

FEDERATION.

In this essay the words " Federation " and " Federal " are
occasionally used — chiefly in quotations — as a matter of convenience.
Purists in political nomenclature may criticise this use. But it seems
unnecessary to define these words, to examine their propriety, or to
defend their use. The fact is that union may be in part Federal,
in part non-Federal. Thus the United Kingdom, although essentially
a Unitary State at the present time, is a Federation in Judicial
matters, since each of the Three Kingdoms has a separate Bar,
Judiciary, and Appeal Court, also in some degree a separate system
of law. For the three kingdoms there is a Supreme Court consisting
of Judges from all the three benches.

METHOD OF ENQUIRY.

Since emphasis is laid on the scientific value of the method of
enquiry, it is well to indicate the method which is here designed.

4 IMPERIAL DEFENCE AND TRADE.

The use of the word " science " in regard to history is a recent one.
Seeley, in his Introduction to Political Science, mentioned that the
subject had been hitherto called Political Philosophy in his University.
Freeman wrote in 1863, " To make a general political inference from
a single example is not a very philosophical way of reasoning ".
Thus what is now called the " scientific " method is apparently what
used to be called the " philosophical " method, a word more compre-
hensive but less pretentious with regard to exactitude of conclusions
and dogmatic adoption of results. Philosophy aims at throwing
the light of accumulated past experience upon present problems.

But the term " science ", as it is commonly used by students of
physical phenomena, does not exactly fit history. Thus Seeley's
comparison of history with astronomy is misleading. History cannot
do anything analogous to the discovery of an invisible planet by
mathematical calculation or to the foretelling of a comet's appearance.
The historian has to deal, in great part, not with unchanging laws
of nature, but with the effects of human volition, with results produced
through untraceable motives and caprices. The historian's calcula-
tions may be upset by the appearance of a single man of genius or
by the occurrence of a single bad harvest. Even the biological
metaphors commonly used by historians must be regarded merely as
metaphors. For a state, at any rate when it has passed the tribal
stage, is not an organic creature like a plant, owing its growth and
development to the uniform operation of silently working natural
laws. Thus de Tocqueville plainly avows that from the study of
democracy in America lessons may be drawn which are applicable
to America, but are not applicable to France ; and that, owing to the
peculiar character of the French people, French examples are not
exactly applicable in other countries.

It is true that certain broad generalisations seem to be obtainable
from the consideration of large periods of history, and these seem to
indicate the operation of natural laws. Thus the prevalence of
municipal vigour throughout Western Europe in the later Middle
Ages seems to be a kind of organic development ; so also the growth
of nationalities from the beginning of the sixteenth century. But
even in such cases any scientific conclusion is doubtful owing to the
numerous varieties and exceptions in such development. Language
which is applicable to the Medieval Republics of Italy is not applicable
to the German Hansa or to the French Communes or to the English

IMPERIAL DEFENCE AND TRADE. 5

Boroughs. And with regard to the national development of the.
sixteenth century, its vagaries, exceptions, and interruptions, form
half the subject-matter of modern history. Moreover, although
certain broad influences, acting over wide areas in the same age, can
be observed, and although these may, in part at least, be attributed
to natural laws, yet the extent and exactitude of this attribution
are very doubtful, seeing that the foundation of modern Europe rests
largely upon Roman occupation and Roman ideas. Thus it is im-
possible to say how far our political civilisation is the gift of Rome
and how far it is a natural growth — unless we are to conclude that
these two things are the same. At any rate Mommsen has shown
that the course of European history has been in great part directed
by Caesar's conquest of Gaul : a conquest which was a work of policy,
inspired partly by personal ambition, and carried out by individual
genius through a careful combination of force and diplomacy.

Yet the universal use of biological language by historians and
statesmen must have some foundation. Its justification lies in the
fact that, as a rule, the most potent factor in national growth is the
sense of kinship. And in a State whose territory roughly corresponds
to this sense of kinship, so as to be inhabited by a sort of enlarged
family or tribe, a natural evolution may be expected similar in some
degree to physical growth. Institutions, or at least habits and the
use of institutions, grow up, and come to the people subconsciously,
however much these things may be diverted and checked by the
appearance of a Caesar or a Napoleon.

But when one comes to consider the union of autonomous States,
then physical comparisons are apt to break down. A stream of
tendency does not suffice to bring about such leagues or unions.
They do not come imperceptibly, like the growth of the British
Constitution. They are striven after, constructed, and built up by
deliberate will and conscious effort.

But the difficulty of finding exactitude in results does not affect
the use of the scientific or philosophical method. The enquirer must
begin by shedding all prejudices and partisan influences. He must
interrogate the facts of history. The economists now commend
the " historical " method*, apparently using the term " historical" in
the same sense in which historians use the word " scientific." Thus

* E.g., Professor Nicholson in the Cambridge Modern History, Vol. X.

6 IMPERIAL DEFENCE AND TRADE.

between economists and historians the definition moves in a circle.
This does not mean that the circle is a vicious one. It may merely
mean that our vocabulary is defective or confused. In short, the
" historical " method and the '* scientific " method mean the same
thing. The enquirer must accumulate " a large supply of facts care-
fully observed and exactly registered,*" before he proceeds to indicate
tendencies or to seek conclusions. Accordingly the method adopted
in this essay is first (in Part I ) to examine historical examples of
defensive union between States and then (in Part II ) to consider
the particular conditions of the present problem in a connected and
co-ordinate fashion and to attempt a conclusion. Then follows
a brief summary of the work which is actually being done in the
direction indicated in the thesis.

But it must first be distinctly avowed that there are no close
parallels to the conditions now prevailing in the British Empire.
The States of the British Empire differ from all previous examples
of States permanently uniting for common action. They differ in
the mode of their origin and development, in their relations to one
another and to the parent State ; and, above all, they differ in their
geographical situation with regard to one another and to the territories
of foreign States.

The novel character of the problem appears in the fact that there
is no adequate vocabulary applicable to present conditions. The
Dominions call themselves nations and constantly talk of their
national life and development : but they have not the external
status of nations. And the term " colony/' which still accurately
describes them, does not distinguish between them and such
various dependencies as the Falkland Islands, Ceylon, and Barbados.
Again, there is no term which describes the policy of Great Britain
towards the Dominions. " Colonial Policy " is inadequate. " Imperial
Policy " may convey quite a different notion. The inter-State policy
for which we want a word is not domestic policy nor is it foreign
policy. It is something between the two and it overlaps both.

The problem is novel. There are no complete analogies. But
our business is to examine every past example of defensive union
between States, to investigate in each case the causes of failure or
success, and to consider whether there have been any common factors

* Seeley in Introduction to Political Science.

IMPERIAL DEFENCE AND TRADE. 7

in the conditions which have contributed to success in past instances.
The arrangement adopted — (i) history, (2) present tendencies, (3)
actual conditions — involves some repetition, or rather the recurrence
of the same topics viewed in different aspects. Such recurrence or
apparent repetition is inseparable from the scientific method, which
differs from the literary method of artistic grouping of materials.
The teacher of science refers to the same example or the same
experiment again and again. The more familiar it is, the more
valuable it is in use. In fact the essence of the scientific method is
the iteration of the same topic from every point of view, however
tedious such iteration may be.

FISCAL AND COMMERCIAL CO-OPERATION.

One form of commercial co-operation is fiscal co-operation, when
States or provinces either favour one another in their customs arrange-
ments or else abolish entirely the custom-houses between them. This
latter course has usually been taken in permanent historical unions
of States. When this is done — that is to say, when a group of States
destroys its inter-State custom-houses and forms a free trade area
like Germany or Switzerland or the United States — then co-operation
advances to the point of amalgamation for fiscal purposes. For this
particular purpose — the treatment of commerce by customs dues —
the States do more than co-operate : they unite, as when two banks
unite to form a single bank. Thus co-operation disappears or drops
out of sight from its very completeness. Obviously, therefore, such
instances of complete fiscal amalgamation fall within the present
subject, since they are cases of commercial co-operation carried to
its utmost limit. The relevancy of such cases is evident from the
fact that there is often an intermediate step, when fiscal amalgamation
is theoretically complete, but nevertheless some province continues
to form a distinct economic area which may still be said to co-operate
with its neighbours rather than to be completely united with them
in fiscal and commercial matters. Such were for a time the relations
of Western Australia with the rest of the Commonwealth ; such are
the present relations of British Columbia and of Prince Edward Island
with the rest of Canada*, and of Ireland with Great Britain.

* Colonial Office List, 1914, p. 121.

8

PRELIMINARY CHAPTER.

THE INTERACTION BETWEEN THE ECONOMIC INTERESTS
OF A STATE AND ITS FOREIGN RELATIONS.

[Note. — To the present writer it seems unnecessary to prove the fact
that the economic interests of a State and its foreign relations
interact upon one another. This truth might almost be
accepted as an axiom, since it pervades all national history
and is accepted by all economists of every school. Indeed
the supporters of both the doctrines indicated in the present
thesis base their arguments partly on this fact and on their
interpretation of it.

Yet, since the question is suggested in the thesis, it is
incumbent upon the writer to answer the question, and in
its proper place, at the beginning. But, for the sake of
simplicity, to avoid cumbering the main argument, the
question is here treated apart in a preliminary chapter, as
an introductory axiom rather than as part of the enquiry.
Moreover, since the question is answered by the whole of
history, obviously it can only be treated here in the most
sketchy and rapid fashion. Hence the slight and merely
illustrative character of this chapter.]

Wars are the crises of Foreign Policy and treaties are its epochs,
that is to say its points of pause and of clear self-avowal. Thus the
close connexion between foreign relations and economic interests
may be most clearly grasped by glancing at some of the wars and some
of the treaties which form landmarks in the Foreign Policy of England
and of Great Britain since the close of the wars of the Roses. That
event is a convenient starting-point, since it marks the beginning of
the two movements which most concern the present enquiry, first
the rise of nationality and of national consciousness, secondly the
movement of colonisation or the settlement of Europeans in newly-
discovered countries.

IMPERIAL DEFENCE AND TRADE. 9

A central motive of Henry VI Fs policy was the support and
encouragement of British trade with the Netherlands. This object
was furthered by alliance with Spain, and it took shape in two great
commercial treaties. Again, perhaps the most important event of
Henry VII's reign was the voyage of Cabot, despatched by the King
in search of a north-west passage, by which trade might pass to the
far East. This expedition, which " found the new isle " is the pro-
logue to the long story of British colonisation, of which the motive
was in great part commercial. During the following two reigns this
motive, though constantly present, is not so obviously prominent.
But under Mary and Elizabeth commercial and economic interests
again predominate : for British relations with Spain during Elizabeth's
reign were swayed chiefly by two great economic influences, first the
position of the southern and south-eastern English ports on the sea-
route between Spain and the Netherland dependencies of Spain,
secondly the commanding commercial position of Spain as mistress
of the West Indies and of Tropical America. Under the first two
Stuarts the mismanagement of foreign affairs diminishes the value
of the lessons to be drawn thence. But the close of the Civil Wars
introduces a long commercial struggle with Holland which was only
closed at the Peace of Breda in 1667, and also a commercial struggle
with Spain, which reached a temporary and indecisive conclusion at
the Treaty of Madrid in 1670. The commercial motives of the " Second
Hundred Years War " (1688-1815) have become a commonplace of
history. They are emphasised by a succession of treaties : — The
secret Treaty of commerce with " Charles III of Spain " in 1707,
the Asiento Treaty of 1713-14 ; the Treaty of 1748 which closed the
trade war of Jenkins' Ear ; the Peace of Paris, which realised a part
of Chatham's vast design of commercial and colonial predominance
for Great Britain. In the Revolutionary and Napoleonic Wars, the
commercial motives which underlay Pitt's foreign policy, although
obscured by the overwhelming needs of national defence, were
nevertheless always at work. The spirit which dictated the
commercial treaty with France in 1786 led Pitt to cultivate French
amity during the earlier stages of the Revolution : and the
immediate occasion which precipitated the Anglo-French war was
the aggression of the French Republic upon the Low Countries, a
movement which was felt to be a menace to the commercial and
economic position of Britain. Napoleon called his enemy a nation

ro IMPERIAL DEFENCE AND TRADE.

of shopkeepers and attempted to fight them by means of commercial
protocols, Berlin and Milan Decrees, which were countered by
British Orders in Council. The Peace of 1814-15 left Great Britain
in possession of valuable trading-ports in three continents.

The Foreign Policy of Castlereagh and of Canning, and the attitude
of Great Britain towards the European Congresses was largely guided
by commercial interests in the Spanish-American Republics. The
economic element in more recent foreign policy hardly requires
elucidation. The names alone of Egypt and of China suggest examples
of armed force and diplomatic pressure exercised in order to secure
commercial or economic advantages.

The converse truth, that foreign policy affects economic con-
ditions, requires no proof. Every war, every peace, every commercial
treaty, every item in the customs tariff either of the nation concerned
or of its neighbour States affects the economic condition of that
country. Chatham made commerce flourish by war, as his pre-
decessor Walpole had made commerce flourish by peace and
diplomacy. The tariff of President McKinley affected Great Britain
far more than the diplomatic menaces of President Cleveland.

Finally it should be clearly grasped that every item in the customs
tariff of every country is a problem not only of domestic policy and
administration, but also of foreign -policy. This truth is obvious
in the case of countries adopting a protective tariff. But it also
applies, though in a lesser degree, to countries where the tariff is only
designed for purposes of revenue. Thus, for example, a recent
reduction in the duty on the import of currants into Great Britain
was welcomed in Greece as an act of international courtesy. The
British duty on sugar is a matter which affects half the civilised
world. One example may be added : it is believed in the River
Plate that the hygienic restrictions imposed in England on the
import of Argentine cattle are in fact imposed as a measure of
commercial protection for the British farmer, and that the alleged
prophylactic necessity is merely meant to cover a policy intended
to have the same effect as a protective tariff. This is an effective
illustration of the way in which measures dictated by purely
domestic and internal needs may affect the foreign relations of the
State and may actually have to be viewed as being also measures
of foreign policy.

PART I.

HISTORICAL EXAMPLES.

" Political science without History has no root."

— Seeley.

" Remember the spirit of the age, but do not forget the ages."
" Quod semper, quod ubique, quod ab omnibus."

B

CHAPTER I.
THE LEAGUES OF ACHAEA AND OF LYCIA.

The vitality of Thucydides' History and of Aristotle's Politics
indicates that the essential problems of politics do not profoundly
differ in city-States and in large territorial States. This doctrine
is held by Freeman, whose History of Federal Government in Greece
and Italy is an admirable introduction to the whole topic of defensive
union between autonomous States. His book demonstrates the
great value and the possible stability of such unions, and also shows
that union can only be achieved by deliberate statesmanship and
persistent personal effort.

The success first of the Achaean League and afterwards of the
Lycian League was due to observation and experience drawn from
previous examples, that is to say to the scientific or historical method
applied by statesmen. The importance of State-craft and guidance
appears in the fact that the constitution of the Achaean League,
during its most vigorous age, approximated in actual working to a
monarchy, in which the leader ruled, without ostensibly reigning.

THE ACHAEAN LEAGUE.

About the middle of the third century B.C. the Achaean city-
republics combined to form an Achaean national Union. Their object
was strength and defence. This object was in general attained :
the League endured for more than a century and then fell before the
overwhelming power of Rome.

With regard to the immediate topic, commercial co-operation
accompanying defensive co-operation, there is no direct information.
Geographical conditions in the Peloponnese permitted the formation
of a real Federal State, with a central Congress, Executive, and
military system. For the League spread over a continuous

14 IMPERIAL DEFENCE AND TRADE.

territory so that a man might walk from any city to any other
without crossing alien soil. Yet the Federal Exchequer was
supplied simply by assessed contributions from the cities, each
city being free to raise its revenue and make its contribution in
its own way. The sentiment of city-autonomy was so strong
that no other arrangement would have occurred to the founders
of the Union. But the absence of a Federal fiscal scheme was a
serious defect : for the refusal of any city to pay its quota was
an easy means of shaking or shattering the Union.

Yet the national character of the Union, in which every citizen
of every city was theoretically a member of the Government, must
have implied in practice a considerable degree of commercial co-
operation. " Every citizen of every city in the League . . . had a
right to attend, speak and vote " in the Federal assembly, which met
twice a year for a three days' session. This right implies a facility
of organised social and political intercourse which must have meant
also much freedom of business intercourse, even if the conveyance
or purchase of baggage and provisions be alone taken into account.

LYCIAN LEAGUE.

For at least 250 years (200 B.C. — 50 A.D.) the Lycian League
bound twenty-three cities into a Lycian nation, having a central
Assembly, Executive, Judiciary, and Exchequer. In general this
Lycian League resembled the Achaean League, but improved and
developed in form. The brief notice which contains all our knowledge
of its constitution indicates a closer and more stable fiscal system
than that of Achaea. The words, " The cities pay taxes and take
their share of other public burdens " seem to imply contributions
in labour or in kind, in addition to mere money-payments, by the
cities. This would imply a closer commercial co-operation and a
more active personal intercourse on the part of the citizens of the
various members.

CHAPTER II.

THE THREE TEUTONIC UNIONS 0F PROVINCES
AND CITIES.

The comparative method in history is confused and inconclusive
owing to difference of conditions. But an unusual opportunity of
comparison is offered by the three unions of small city-Republics
or cantonal Republics within the German lands : first the German
Hansa, then the United Provinces of the Netherlands, then the
League of Swiss Cantons. Notwithstanding many geographical
differences, there are unusual similarities. For these Leagues were all
Teutonic ;* they were all formed for purposes of defence ; and they
all grew up under Medieval conditions — which survived both in the
Netherlands and in Switzerland down to the close of the eighteenth
century. Thus a comparative examination of these three Unions
in respect of economic and commercial co-operation ought to be
instructive. ;

The three Unions form a graduated scale in this respect. In the
Hansa, commercial union was the fundamental motive of the League ;
in the Netherland Provinces, defence was the motive of union ; but
commercial Union followed defensive Union. The Swiss League was
a purely defensive Union, without commercial co-operation. Remem-
bering this distinction, the student may observe the operation of
these three methods in these three Unions. In this chapter each
of the three Unions is first examined on its own merits, with reference
to present British conditions. Then an attempt is made to draw
some probable inference from a comparison of the three Unions.

* The Swiss League was essentially Teutonic. But in the i5th and i6th
centuries some French-and-Italian-speaking districts were drawn within its
activities by a process of conquest or absorption, chiefly as dependencies of
individual Teutonic Cantons. Moreover some French districts became " Asso-
ciated Cantons", connected with the Swiss League by alliance rather than by
inclusion in the Confederation.

16 IMPERIAL DEFENCE AND TRADE.

HANSA.

The great Medieval example of co-operation differs in two respects
from our modern British system. In the first place the German
Hansa was a union of towns or city-Republics. In the second place
its avowed and primary object — in theory its sole object — was trade.
The union was formed for the single purpose of advancing and pro-
tecting trade. Its members were essentially trading communities,
and the city-oligarchies which composed and directed the union
were bodies of merchants. Indeed, the union gradually arose from
the action not of governments, but of merchants, who, coming from
different cities, agreed to combine for security in their journeys and
in their foreign settlements. This kind of informal co-operation
was going on for generations before the governments of the cities
were drawn together to form a political union, whose object was
still mercantile. Thus in its earlier stages the union took form first
in caravans and flotillas organised by merchants of different cities
for the safety and facility of trade, and secondly in the "colleges"
of German merchants planted in Slav or Scandinavian or English
towns. In short, companies of Merchant Adventurers came first :
defensive union between town-governments followed. Thus our
present British problem was non-existent ; since the action
which is now proposed as a cement for our existing political
union was the very germ out of which the North-German city-
union grew.

Obviously also the peculiar Medieval conditions, in which the
Hansa grew, differ from our experiences. There was a chaotic system
or confusion of systems — a nominal German national monarchy
(the Emperor being also German king) whose vague and remote
authority was unable to protect its subjects ; and smaller princi-
palities where the more effective monarchical authority was not
national or sympathetic or effective for the protection of the middle-
class citizen. Thus the Hansa sprung, first from self-help among
merchants, then from the co-operation of municipal magistracies
acting together in order to supply the defects of government. Yet
the Hansa deserves close attention. In the first place, although
conditions differed in detail, it successfully solved the same broad
problem which faces us, namely the vagueness or weakness of central
authority. Moreover, the Hansa throughout its effective history,

IMPERIAL DEFENCE AND TRADE. 17

but especially in its earlier days, was a colonising agency and a solver
of colonial problems. During the tenth and eleventh centuries,
the Northern Germans were carrying out a great movement of foreign
settlement, particularly an eastward movement over the Slav lands.
This movement took two forms. First it led to the foundation of
German towns in Slav or Scandinavian lands. Each new town,
peopled by emigrants from various older cities, was kept in touch,
first commercially and afterwards politically, with the cities of North
Germany proper, by means of these combinations of merchants,
which formed the germ of the Hansa. Secondly, the colonising move-
ment led to the establishment of German "colonies" or "colleges"
in foreign towns — Slav, Scandinavian, Flemish, and English. Again,
combination between merchants enabled these settlers to form in
each foreign town a distinct German community inhabiting its own
college or quarter and obtaining from the local authorities recognition
as a self-contained and partly autonomous community. Such were
the German settlements in Nijni-Novgorod and in London, settle-
ments at first forming as it were little self-contained Republics ruled
by the merchants who composed them, afterwards controlled by the
authority of the Hansa, when the combinations of merchants grew
into a political union of the North German towns. In both these
forms of colonial activity, the action of the Hansa is a notable instance
of the efficacy of commercial union in holding together scattered
communities of the same kindred.

Moreover in its whole history the Hansa proves the immense
political strength which may spring from commercial co-operation.
For the commercial union of cities grew into something like a national
Union. In the fourteenth century it was the strongest political
power in Northern Europe : it defeated Denmark in war and held
at its disposal the three Scandinavian thrones. For more than a
hundred years the Hansa acted like a great national Government,
pursuing an active foreign policy and maintaining by land and sea
armed forces which dominated the Baltic. The sense of common
interest was expressed in 1380 through a proverbial phrase which
carries the ring of national sentiment — " What touches one town
touches all ".

The causes of decay of the Hansa are also relevant to the present
topic : (i) the predominance and ambition of one member, Liibeck —
a condition which has been found to be disruptive elsewhere in the
absence of an effective executive, monarchical or semi-monarchical

i8 IMPERIAL DEFENCE AND TRADE.

in character ; (2) an aggressive foreign policy which shocked the
purely commercial aspirations of many citizens and brought the
Union into an invidious international position. This aggressive
movement was partly due to the predominance of Liibeck ; and it
illustrates Freeman's remark that of all forms of Government,
Federation is the least adapted for oppression of one's neighbours ;
(3) changes in the course of trade, which followed the development of
ocean navigation and the great geographical discoveries to East and
West — a point which reminds one that political conditions resting
solely on trade conditions can only be permanent in so far as these
trade conditions are permanent. But this consideration merely
illustrates the weakness of a political system resting solely on trade,
and will not detract from the value of commercial arrangements as a
support to political arrangements ; (4) the development of territorial
principalities or monarchies, that is to say the strengthening of those
Governments whose weakness had rendered the Hansa necessary.
This simply means that the Hansa did its work in its own era and
gave way before the forces of the succeeding age — a development
which does not affect the value and importance of its work ; nor can
it be said that so great a phase in the national development of Germany
was lacking in essential permanence.

THE UNITED DUTCH PROVINCES.

The Union of the seven Dutch Provinces was abnormal in its
origin. It is rather an instance of arrested development taking an
imperfect form than an instance of satisfactory and stable union.
For the seventeen Provinces — ten Belgic and seven Dutch — were on
the way to coalesce into a unitary national kingdom under the
guidance of their Habsburg sovereigns, when that unitary develop-
ment was checked by a succession of accidental shocks. The mon-
archical Executive, which was the most potent organ for the guidance
of national sentiment into the visible form of a unitary nation,
became foreign, anti-national, oppressive : the people was deserted
and betrayed by its guides. Then came the revolt, partly economic,
partly religious in character, which split into two divisions the
provinces which had been growing into one system. Thus the Dutch
provinces to the North became definitely separated from the
Belgic provinces to the South.

IMPERIAL DEFENCE AND TRADE. 19

Nor did the process of disintegration stop at this point. The
Dutch Provinces themselves were arrested in their historical develop-
ment. For these seven revolting Dutch provinces, by repudiating
the monarchy, were thrown back into their former Medieval divisions.
Combined action in a desperate war was a necessity, but combination
could only be effected by agreement of the seven provinces. War
forced them into an agreement and even into a provisional and partial
adoption of monarchical methods. With temporary peace (1609-
1621) the tendency to disintegration recurred owing to the pre-
dominance of one member, the Province of Holland, which resented
the movement towards a central monarchical executive. The result
was civil strife, ending in a political trial and execution, when the
trouble came to a head in the quarrel between Maurice and Olden-
barneveldt and the death of the latter.*

A fresh war (1621-48) and the genius of a great ruler, Frederick
Henry, riveted the Union once more. But the recurrence of peace
in 1648 led to the recurrence of civil strife.

In short the constitutional history of the Republic consists in an
alternation of predominance between the central authority, led by
the Prince of Orange, and the local authorities, led or rather dominated
by the Province of Holland. In case of urgent danger, the central
authority guided the State. When the danger passed, the Province
of Holland aimed at practical supremacy ; and succeeded in acquiring
it during a minority or upon failure of issue in the House of Orange.
The latest of these alternations — this time the extrusion of the Prince
and the recurrent predominance of Holland — was actually taking
place on the eve of the French Revolution, when Prussia, supported
by Great Britain, intervened and forcibly restored the Prince of
Orange. As in the case of Germany and Switzerland, the movements
of the Revolutionary and Napoleonic era swept away Medieval
survivals and left place for the establishment of a unitary Dutch
monarchy, t

The Medieval anomalies of the Dutch Republic may seem to remove
that Union from the scope of this enquiry. But it would be hasty

* This quarrel was ostensibly a religious controversy in part : but its essence
was political, and the main charge against Oldenbarneveldt was that he had
sought to dissolve the Union.

f The artificial and temporary union with Belgium (1815-30) is beside the
point.

20 IMPERIAL DEFENCE AND TRADE.

to dismiss an example owing to certain differences. The centrifugal
and local influences working in the Dutch Union are not identical
with those which may be latent in the British Empire ; but it would
be rash to assume that they are wholly dissimilar.

The weakness of the Dutch Union lay in the want of an effective
central authority. So amorphous and so cumbrous was the system
of the States-General and the Council of State that the maintenance
of the Union is itself a wonder demanding explanation. The explana-
tion is to be found first in the thoroughly sober, sensible, and practical
character of the Dutch, secondly in the force of commercial union
and commercial profit. For the national wars of the United Provinces
were trade wars. Their diplomatic objects were (i) The general
carrying trade ; (2) The right to trade in East Indian and West
Indian waters ; (3) The monopoly of trade with their own
colonial dependencies ; and (4) The closing of the Scheldt, whereby
Antwerp was sealed up and prevented from becoming a rival port
to Amsterdam, Rotterdam, and Flushing. The third effective bond
was the possession of an extensive and productive colonial Empire
in the East.

SWITZERLAND.

In 1291 the three forest cantons united for defence, in view of
the anarchy prevailing in the Empire. Their League was strengthened
and held together by resistance to Habsburg aggression ; and during
the following sixty years five other German States were drawn into
it by the same necessity of defence. The Confederation of eight
cantons was held together for nearly a century by the needs of
defensive war ; but towards the middle of the fifteenth century
success in war, comparative security, and the acquisition of territory
brought disputes and even war between the Confederates. External
war against Charles the Bold brought a brief phase of triumphant
union (1474-78) : but " after these battles the Confederation was
once more threatened with the danger of disruption. . . . The
dissolution of the Confederation seemed imminent* ", but was
averted by the action of statesmen in a Convention which strengthened
the Union.

* The quotations are from The Swiss Confederation by F. O. Adams and
E. D. Cunningham.

IMPERIAL DEFENCE AND TRADE. 21

The successive inclusion of other States completed, early in the
sixteenth century, the Confederation of the Thirteen Cantons. " It
lasted till 1798 without modification and was marked by internal
discord, religious wars and revolts of peasants." Religious con-
troversy was the chief, but not the only dissolving force, " and in
the sixteenth century the Confederates were more and more divided
amongst themselves, so that the Federal tie scarcely existed . . .
The essential attributes of the Central Diet were foreign affairs, war,
and inter-cantonal disputes, but their authority was, if not entirely,
at least nearly annulled by the fact that the Cantons were themselves
sovereign at home, and the deputies could only act according to their
instructions ".

The task of Government was complicated by the fact that the
territory of the Confederation consisted in great part of " Associated
Lands " and " Subject Lands ", whose inhabitants were not full
citizens.* These people, natural equals to their neighbours of the
sovereign Cantons, were treated by the oligarchies of these Cantons
as dependent allies or as conquered subjects. Thus Switzerland as
a whole was a conglomeration of sovereign Confederate Cantons, of
Cantons unequally allied with them, and of conquered dependents.
The outbreak of the French Revolution led to uprisings among these
subjects.

During the Revolutionary and Napoleonic period, two attempts
were made to re-constitute the Cantons by foreign pressure (1798
and 1803). It is obvious that permanent national constitutions
cannot be built up in that way ; but French intervention prepared

* It is pointed out in Chapter VI. that the common administration of
dependencies provides a bond of union between Confederate States. But in
Switzerland there were no true " dependencies " in the equitable sense of the
word, and there was no real common administration : — (i) The subjects and
associates were as much entitled to be called " Swiss " as their neighbours ;
they inhabited a continuous territory under similar conditions of civilisation,
and they were naturally qualified for full admission to the Confederation on
a basis of equality. (2) Most of the Subject Lands were subject to individual
cantons, not to the Confederation. (3) The Associate or Subject Lands whose
relations were with the Confederation, occupied a confused and undefined
position, and there was no central machinery for their administration. In
short the position cannot be described as the common administration of depend-
encies, but rather as a condition (a) of unjust inequalities, disabilities, and
exclusions among the inhabitants of the territories of the Confederation, (b) of
defective central organization for handling these matters.

22 IMPERIAL DEFENCE AND TRADE.

the road, by sweeping away Medieval anomalies and placing all
the Swiss upon an equality as citizens of one country.

On the return of peace, in 1815, a Constitution was drawn up
which may be regarded as mainly a Swiss work, since it was drawn
up by the Swiss Diet and was accepted almost without alteration
by the Congress of Vienna. The Federal tie was ostensibly made
stronger than it had been before 1798 ; but " the Confederation
suffered from a fundamental vice, the powerlessness of the central
authority ". Agitation and discord followed ; religious disputes
embittered the trouble. In 1842 four Catholic Cantons seceded
to form a Sonderbund. Civil war followed, and it was only by
armed force that this new League of seceding Cantons was dissolved.

This civil tumult, though influenced by religious controversy,
was mainly political in origin, and the trouble was solved by state-
craft. A committee of fourteen was appointed to draw up a
Constitution. After seven weeks' labour, they presented their
project, which was eventually accepted by all the Cantons.

This Constitution of 1848, which still subsists in the main, provided,
for the first time, a stable bond of Union for Switzerland. A definite
plan of defensive and financial co-operation was adopted. In the
department of defence, the control of the troops was reserved to
the central authority. In the department of financial and com-
mercial co-operation a unitary system was practically adopted.

" A great benefit was conferred upon the nation by unification
of such matters as coinage, weights and measures, and posts, all of
which came under the control of the Confederation. The Cantons
surrendered to it the exclusive right to levy duties at the frontiers
of the country and the monopoly of fabricating war-powder, and
they abolished numerous internal dues and tolls, receiving certain
indemnities in return."*

In 1874, by means of the Referendum, the Constitution received
an important amendment, which strengthened the central authority,
especially in the matter of military control. At the same time a
more homogeneous character was given to the nation by the establish-
ment of compulsory secular education and by the subjection of the

* However, the octroi duties levied on goods passing from one canton to
another remained in force till 1887 (The Model Republic by F. G. Baker, p. 519).
These tolls levied for the purposes of cantonal revenue may be compared to
the municipal octroi which still prevails over most of the European continent.

IMPERIAL DEFENCE AND TRADE. 23

ecclesiastical authority to the Civil Power throughout the Union.
This change in the Constitution has intrinsically little bearing on
the present topic. But the generally peaceful and convenient manner
in which the amendment was effected, admirably illustrates the
efficacy of the Constitution adopted in 1848.

Thus the Union of Switzerland, which has won a kind of
renown as an instance of successful combination, dates in fact
only from the middle of the nineteenth century. The preceding
five centuries of Swiss history (1300-1800) afford one positive
lesson, namely, that the urgent necessity of defence against
aggression will suffice to unite kindred and neighbouring com-
munities, possessing generally a common interest, so long as that
pressing danger lasts : but this is a lesson which scarcely requires
illustration. Whenever the necessity passed, the union slackened.
Sentiment, common historical achievements, geographical position,
the bonds of kindred and the ordinary needs of peaceful life
were ineffective antidotes to the forces of localism : and the most
precarious crisis in the history of the Union was the moment of
triumph in a common war. The recent history of Switzerland
shows that the fundamental elements of possible union existed all
the time, and that the Swiss possess a practical and peaceable
commonsense comparable to that of the Dutch. Here was a
group of South German communities, marked off by position
and sentiment from the rest of Germany. A priori they might
seem better fitted to achieve permanent and effective union than
the Hansa towns of North Germany. But the Swiss Cantons,
during five centuries, failed to create the necessary machinery of
union, the machinery which should be both a visible symbol of
the advantages attaching to union, and also a working embodiment
of the League. This palpable and stable embodiment of union
was achieved, mainly through the administrative union of the
commercial and financial part of Government, in 1848.

COMPARISON OF THE THREE LEAGUES.

The three Teutonic unions of small members (cities, provinces,
and cantons) seem to supply materials, not indeed for any general
conclusion, but for some tentative general observations.

The Hansa, a very remarkable and exceptional union, only to
be accounted for by special explanation, owed its existence to co-
operation for trade. The union was eminently successful, exempli-

24 IMPERIAL DEFENCE AND TRADE.

fying the force of this motive and the efficacy of political action
based upon it. The Hansa lasted as long as the conditions lasted
to which its existence was due. It was prevented from developing
into a nation not by intrinsic defects but by its geographical dis-
tribution and by the territorial system which overlapped its action.
In fact, its long duration and notable success are the things which
require explanation. They can only be explained by its essentially
commercial character.

The Dutch Provinces were forced into union by the necessities
of war. Every recurrence of peace shook the Union and loosened
its bonds. During any long period of peace the Union was only
held together by the influence of a succession of great statesmen
mostly working on monarchical lines, by commercial interests, and
by the possession of trans-oceanic dependencies of great commercial
value. The weakness and occasional failure of this motive of union
lay in the fact that all the members were not equally concerned
and equally benefited by this commercial co-operation and that
trade policy was often bound up with the odious preponderance of
one member of the Union. Under these conditions, the general
efficacy of this economic bond of union is more remarkable than
its occasional failure.

The Swiss Cantons united merely for defence : in peace the
bond was ineffective and was repeatedly broken. The Union only
became a stable reality with the achievement of fiscal unity in 1848.

In the Low Countries after the War of Independence, and in
Switzerland after the victories of 1474—78, most of the elements
conducive to a union of hearts were present in unusual strength—
apparently in almost triumphant strength. In Switzerland, where
the machinery of material co-operation was absent, these motives
were wholly ineffective. In the Dutch Union, where there existed
a cumbrous and imperfect machinery of co-operation, these motives
were partially effective. In the Hansa, where nationality was not
the aim and the sentimental motives were hardly existent, co-opera-
tion for trade brought about a singularly effective union.

The inference seems to be that the strength of union is likely
to vary with the strength of its machinery for co-operation in
matters of economic and material interest. Upon starting this
enquiry, this particular comparison of results within the Teutonic
world had not occurred to the present writer : the indications
suggested by it were unexpected and surprising.

CHAPTER III.
THE GERMANIC BODY.

The problem of German unity took form when the young
Emperor Charles V met the Diet of the Empire at Worms in
1521. " The Diet of Worms brought forth a constitution ", says
Mr. Armstrong — a constitution which aimed at uniting all the
German States, principalities, and free cities, by means of a central
organisation. The central authority was to consist of three parts :

(1) A German monarchy rising above all the provincial monarchies ;

(2) a Supreme Court of Justice ; (3) an Imperial Council.

Next year this new Government met the Diet to consider
the question of national finance. The Diet passed a measure
for a national tax of four per cent, on all imports and exports,
with exemption for the necessaries of life ; custom-houses were to
be established along the whole frontier of the Empire. The scheme
was complete, and actually ordained by the Legislative Diet. But
the cities, interested in opposing any restrictions or burdens on
trade, appealed to the Emperor, who prohibited the tax. Thus
fell to the ground a proposal which would have provided " an
invaluable lever for the unification of Germany ".

" Few are the constitutions which survive their infancy ", says
Mr. Armstrong. In this case the chances of survival were ruined
by reversal of the unifying policy initiated by the Diet. The
disintegrating forces of religious controversy and of centrifugal
State-interests found full scope ; and finally, by the Peace of West-
phalia, which terminated the Thirty Years' War, the States of
the Empire acquired the right of concluding separate alliances with
foreign Powers, an arrangement which involved the right of separate
warfare. This meant that the independence of each State was
thenceforth only limited by the limitation of its strength. The
imperial bond sank into the shadow of an idea, and the defensive

* Professor Pollard in Cambridge Modern History, Vol. II.

26 IMPERIAL DEFENCE AND TRADE.

arrangements of the Empire were thenceforth totally ineffective.
These later developments are, as regards their detail, alien to the
tendencies of the British Empire. The relevant point is this, that
early in the sixteenth century the inter-State policy initiated by
the Diet gave the opportunity of providing a means of unity
through a common interest recognising one frontier for the whole
Empire. The failure of this policy left room for the unrestrained
working of any disintegrating forces which might exist.

Although the geographical problem is entirely different, never-
theless there are many points of resemblance between the British
States of the twentieth century and the German States of the six-
teenth century. For, except for the crucial point of religious division,
all the sentimental, ethical, and domestic bases of unity were present
in the Germanic body in a purer and stronger form than in the system
of British States to-day, while on the other hand the visible and
tangible bonds of amity are curiously alike. In both cases we find
an Imperial Court of Appeal, an Imperial Council,* and a monarch
exercising nominal supremacy over the whole system of States and
at the same time possessing a nearer sovereignty of a more distinctly
territorial nature in one of the States, f

The most important of the Germanic bodies, the Diet or assembly
of legislators, is wanting in the British Empire ; but its functions
as a means of conference (though not as a legislature) are in some
degree supplied by the various agencies described in Chapter VIII.

In view of these analogies it is worth noting that a proposal,
resembling the fiscal measure passed by the German Diet in 1521,
was actually proposed in 1887 by Jan H. Hofmeyr, leader of the
Afrikander party. His scheme was " to promote an imperial tariff

of customs (to be levied independently of the duties payable

under existing tariffs) on all goods entering the Empire from abroad

* This rather informal and experimental body may be compared to the
Committee of Imperial Defence plus the Imperial Conference.

j- This incongruous position of the monarch was a potent influence for
disintegration, since the Emperor subordinated his imperial or " national "
position to his territorial position. This actual danger is little to be feared in
the British instance, since the monarch in his home kingdom reigns but does not
rule. Yet in any development of closer union the position of the monarchy
is a delicate matter. The monarchy, universally recognised in the British
dominions, provides a great means of union, to be treated with the greatest
tact and caution.

IMPERIAL DEFENCE AND TRADE. 27

— the revenue derived from the new tariff to be devoted to general
defence ". The Afrikander leader avowed " two objects — to
promote the union of the Empire, and to obtain revenue for the

purpose of general defence he wished to counteract what

he called ' territorialism ', or the tendency of local interests to bring
about the disintegration of the Empire ". This scheme was warmly
advocated in Canada at the same time. It should be noted that
the German measure of 1522 and the Afrikander-Canadian scheme
of 1887 did not amount to Free Trade within the Empire, but merely
to the imposition of an imperial toll on foreign goods, without pre-
judice to the maintenance or modification of existing tariffs.

For three centuries no opportunity occurred for a movement
towards German unity. Then, after the catastrophe of the Napo-
leonic wars, conditions were so changed that modern Germany almost
offers a fresh historical example. The reduction in the number
of sovereign States from three hundred to thirty-nine facilitated
common action. The shameful humiliations recently brought upon
all the Germans by their divisions had taught the necessity of
union ; and this lesson had been driven home through a very
effective propaganda by statesmen, poets, and journalists, who spoke
as Germans to Germans, and played upon the national sentiment
and traditions which were common to all the Germans. Finally,
the national spirit had been roused and the national imagination
stirred in the most telling and dramatic fashion by the partici-
pation of all Germany in the Battle of the Nations and in the
final phases of Napoleon's overthrow in 1813-14.

After 1815 reconstitution was a necessity. A Germanic Con-
federation was formed, comprising the thirty-nine sovereign States.
This Confederation was distinctly an attempt at a defensive union
of all Germany. " Its object was to guarantee the external and
internal peace of Germany and the independence and inviolability
of the Confederate States. Its members undertook to defend not
merely Germany as a whole, but each individual State, in case of
attack, and mutually guaranteed all those possessions which were
included in the Union."* A Diet in permanent session represented
all the Confederate States. All differences between the members
were to be submitted to the Diet, and in the last instance to a court

» Professor Pollard in Camb. Mod. Hist., Vol. X.

28 IMPERIAL DEFENCE AND TRADE.

of arbitration. The special object of this defensive union was the
security of Germany against danger from France or Russia. There
were certain Federal fortresses, belonging to the whole Germanic
body, and the armed forces of the Confederation were to consist of
contingents from all the States. This Federal army, owing to the
divisions between the States, was rather a shadowy arrangement.
Nevertheless the defensive character of the Confederation was
stirred into activity when a question of Foreign Policy occurred
which was felt to concern the whole of Germany, such as the question
in what way Schleswig-Holstein was to be retained within the
Germanic body. And if some great shock had menaced the security
of all Germany, it is probable that the defensive power of the Con-
federation might have sprung into temporary activity to meet the
special emergency.

But in general the Confederation was weak and ineffective.
The Constitution of 1815 did not mean union. The forces of
localism, the territorial interests of the princes, the foreign elements
in the Prussian and Austrian monarchies, the rivalry of these two
States, and finally the anti-national policy of Metternich were
forces opposed to Union ; and the " Confederation " of 1815 was
little more than a League of Courts. Constitutional agitation did
not entirely coincide with the Germanic movement, and patriotism
was for the most part local in its scope.

The first definite step towards a closer German unity was the
abolition of internal tolls within Prussia, a measure which turned
the Prussian kingdom into a large free trade area : thus, in 1819,
came the first Prussian tariff treaty with one petty German State.
The possible results of this step were clearly seen, and no fewer than
three rival tariff leagues were formed in Germany to thwart the
influence of Prussia. But the first step was the effective one : free
commercial intercourse was established over most of Northern
Germany : the rival leagues collapsed, and their members suc-
cessively joined the Prussian Zollverein. This inter-State economic
development was accompanied by an almost undesigned national
development, which was stirred into open expression by the need
of united action in matters of foreign policy concerning all Germany,
such as the question of Schleswig-Holstein and of French ambitions
on the Rhine. In 1852 economic unity was achieved : all Germany,
except Austria, belonged to the Zollverein.

IMPERIAL DEFENCE AND TRADE. 29

The unfortunate events of 1848-52 had weakened Prussian
influence ; and the effort towards a United Germany might have
relapsed into a vague aspiration, if it had rested simply on senti-
mental feelings. But the matter now concerned the interest or
welfare of the people. Economic union gave substance and con-
tinuity to the movement towards political union. Austrian efforts
to wreck the Zollverein failed, and that League was renewed for
twelve years in 1864.

At that date Bismarck's administration (which dated from
two years back) had scarcely achieved stability in Prussia, where
his foreign policy was hated by the Parliament and distrusted by
the King : but in this economic movement Prussia represented
the great majority of the German nation.

The methods by which German unity from 1864 to 1871 was
forced on by Bismarck, and the direction given by him to the
movement, are alien to British political life and need not here be
studied. But in 1864 unity was in sight, and Bismarck's later
efforts were based on the work already done. That work proves
the immense effect of economic co-operation in furthering political
co-operation. It also illustrates two other points, first the great
value of literary and intellectual propaganda ; secondly the need
of steady deliberate effort and persistent statesmanship. Co-
operation, whether purely defensive or also commercial, is not
entirely a matter of spontaneous development. It must be in great
part a deliberate and constructive movement, to be effected by
diplomatic administration and legislative action.

NOTE ON RELIGIOUS CONTROVERSY AS A DIVIDING FORCE IN
GERMANY AND IN SWITZERLAND.

One consideration weakens the value of German and Swiss
analogies. In the sixteenth and seventeenth centuries Germany
was torn asunder by religious strife and religious civil war, and
the Swiss League was repeatedly split by the same force. It is
impossible to conceive such quarrels in the British Empire. Yet
it must be remembered that in Germany and in Switzerland
religious controversy was not the only disruptive force. Indeed,
in Germany the princes largely availed themselves of religious
controversy to further their political separation. Supposing that
the disruptive force of religious controversy had been removed,

30 IMPERIAL DEFENCE AND TRADE.

much bloodshed would have been spared ; but it is extremely
improbable that German unity or Swiss unity could have been
achieved without economic and fiscal union. Moreover, it cannot
be said that in the Germany of 1815-1866 religious differences
seriously barred the way to unity. Fiscal union was found to be
the only means of overcoming the forces of localism.

Besides, although the controversial conditions prevailing in
the sixteenth and seventeenth centuries cannot conceivably recur,
it would be most unphilosophical to assume the impossibility of
disruptive forces acting with bitterness and animosity. In 1763,
disruption in America seemed improbable. A century later the
American Civil War illustrates the possible weakness of unions.
Even in our own times, if religious differences happen to coincide
with racial, political, industrial, and social differences, the result
may be an animosity strong and even active. So late as 1837 Lord
Durham in Canada found " two nations warring in the bosom of
a single State ". A dozen years ago South Africa was similarly
divided. To-day Ireland is a warning.

In short, although no historical analogy is complete, every
historical analogy is worthy of study.

CHAPTER IV.

UNIONS IN BRITISH COUNTRIES.

THE UNITED COLONIES OF NEW ENGLAND, 1643.

The New England colonies in their infancy found themselves
exposed to common danger from Indian unrest and from Dutch
rivalry. Connecticut, the colony most needing support, urged
co-operation in vain for four years. Then the breach between the
King and the Parliament brought home to all the need of union
for external policy and self-defence. In 1643 " the four United
Colonies of New- England " were bound together by a formal written
constitution in "a ... perpetual league ... for offence and
defence, mutual advice, and succor . . . both for preserving and
propagating the truth and liberties of the Gospel and for their own
mutual safety and welfare."

Each colony still managed its own affairs. Eight Commissioners,
two from each colony, were to " determine all affairs of war and
peace, leagues, and charges and numbers of men for war, division
of spoils . . . receiving of more confederates ..." In case of
disagreement, the question was to be referred to the four colonial
legislatures. War expenses were to be levied from each colony
according to population. The board was to meet annually — a
distinct element of strength.

This Confederation could reckon in an unusual degree upon a
combination of interest and of sentiment to support it : for its
members were bound by a social and religious sympathy of unusual
strength. The statement quoted above concerning the religious
element in the Union was no mere form of words, but a solid reality :
the eight commissioners were to be Church members.

The League proved successful in the one point wherein such
Leagues have usually won particular and temporary success, that
is to say the vindication of their security in a crisis which menaced
them all. The Indian danger was countered : Dutch rivalry was

32 IMPERIAL DEFENCE AND TRADE.

checked. But the League suffered from two inherent weaknesses ;
first the inequality of the members, secondly the separate fiscal
action of each colony.

Massachusetts contained five-eighths of the total population
of the Confederation. Her military contingent was to be some-
thing less than half : her war contribution exceeded half. Yet
she had only the same representation with colonies containing one-
fifth of her population. She frequently strove to exercise more
than her formal powers, thus incurring the enmity of the smaller
members. Twice this friction came to a head, the occasion being
in each case a question of foreign policy. The first instance occurred
at the very moment when the Confederacy was formed. In 1643
the eight Federal Commissioners decided on an expedition against
the Narragansett Indians. Massachusetts objected. The expedi-
tion started, but failed owing to the abstention of the largest partner.
Nine years later, war having broken out between England and the
Dutch Republic, the New England Commissioners resolved to attack
New Amsterdam. Massachusetts dissented, arguing that the Com-
missioners had no power to determine the justice of an offensive
war. The dispute was accidentally extinguished by the conclusion
of peace in Europe. These two disputes illustrate the weakness
of the pro rata contribution, each member levying the money in
its own way ; the weakness being emphasized in this case by the
fact that there was no contribution except in case of actual war.
This point illustrates the great value of a permanent Exchequer,
or at least some central fiscal policy to take its place.

As to fiscal independence, Connecticut, holding the mouth of
the Connecticut river, levied toll on every passing vessel, including
Massachusetts vessels sailing to an up-river Massachusetts town.
Massachusetts complained. The Federal Commissioners deciding
against her, she imposed duties at Boston on the trade of her sister
colonies.

Notwithstanding its formal constitution and its Executive
Council, the Confederation, owing to these two defects, was not
a permanent or stable arrangement even during the twenty years
of its active life.

Its practical collapse in 1664 was chiefly due to external
causes. Its remaining twenty years of occasional action and
general impotence need not be treated.

IMPERIAL DEFENCE AND TRADE. 33

THE THIRTEEN COLONIES.

"Just as the British constitution is the most subtle organism
which has proceeded from progressive history, so the American con-
stitution is the most wonderful work ever struck off at a given time
by the brain and purpose of man." — Gladstone.

The Thirteen Colonies of the Atlantic sea-board were severally
connected with Great Britain, but not directly connected with one
another in regard to Government, except that the same Royal
Governor sometimes held office in adjacent colonies. Their divi-
sions were historical and geographical in origin, corresponding to
separate acts of settlement. Thus there was an economic as well
as a political factor in the continuance of these divisions, since each
settlement fixed its base and outlet of communication upon navig-
able waters, and thence spread inland and coastwise. Thus Massa-
chusetts in the north and Georgia, 800 miles to the south, were related
to Great Britain and to one another in much the same way as New-
foundland and New Zealand are to-day related to Great Britain and
to one another, the intercolonial bond being of an indirect and remote
kind. Each colony had its own Executive, Legislative, and Judicial
system, its own capital, its separate militia, and in some degree its
own policy of external affairs towards Indians, French, Spaniards,
or Dutch, and also towards British King, Parliament, or Common-
wealth.

But they were not completely isolated. All called themselves
English and recognised British allegiance. There was a general
similarity in administration and political methods ; and the menace
of French advance was a motive of union. Yet attempts at Union,
urged by the Mother-country during the two generations preceding
1755, were all failures. A congress representing seven colonies met
in 1690 to concert action against the French, and served in some
degree its temporary purpose. Another congress, summoned in
1754, to consider permanent union, effected nothing, notwithstanding
Franklin's repeated warning, Unite or Die. It is true that the failure
of the congress of 1754 was partly due to the attitude of Great Britain.
Yet the attitude of the Colonies themselves clearly showed that
for them natural bonds of union were ineffective, even at moments
of pressing common danger, in the absence of a palpable constitu-
tional link, a permanently working machinery of co-operation, and

34 IMPERIAL DEFENCE AND TRADE.

some definite common possession to be defended. The policy of
the French drove them into crude attempts at combination, and
that was all.

As in the case of the Dutch provinces, rebellion against consti-
tuted authority produced united action, as an indispensable pre-
liminary to victory. In 1774 the efforts of statesmen assembled
a Continental Congress which two years later drew up "Articles of
Confederation . . . and perpetual Union". This Constitution
served its purpose, more or less effectively, during the war : but
the advent of peace in 1781-2 proved that a scheme designed to meet
a special emergency broke down when the pressure relaxed, and
that the racial and historical bonds, thus described by Jay in the
Federalist, were not adequate elements of permanent union :—

" Providence has been pleased to give this one connected
country to one united people — a people descended from the same
ancestors, speaking the same language, professing the same religion,
attached to the same principles of Government, very similar in their
manners and customs and who . . . fighting side by side . . . have
nobly established general liberty and independence."

The main defects in the '' Confederation " were (i) equal repre-
sentation of States, without regard to population ; (2) absence of
a federal Exchequer or of any financial authority in Congress,
which could only request the States for supplies ; (3) fiscal
independence of the States, which levied tolls and customs upon
one another. The resulting weakness showed itself in the difficulty
of all foreign negotiations, and especially of commercial negotiations. *

In 1782 the New York Legislature urged the assembly of a
revising Convention, in view of the financial impotence of Congress
and the want of a regular revenue. But the actual initiation
came from Virginia, whose Legislature invited deputies " to examine
. . . the trade of the States ; to consider how far a uniform system
in their commercial regulations might be necessary. . . ."f The

* Fiske, Critical Period of American History, p. 154.

f The comment of Bluntschli is noticeable. In 1872 he wrote that the
initiation of the Constitution was " the attempt of the State of Virginia to
assemble a meeting of deputies .... to take into consideration the
general commercial interests and to pave the way for a kind of tariff-Union ".
— From a pamphlet on The Foundation of the American Union.

IMPERIAL DEFENCE AND TRADE. 35

State of New Jersey went further, empowering their deputies " to
consider how far a uniform system in their commercial relations
and other important matters might be necessary to the common
interest and permanent harmony of the several States ". Five
States sent deputies. But next year, 1787, the Convention of
twelve States met to draw up the Constitution of the United States.
The " Confederation ", which had been merely a League of Sovereign
States, vvas replaced by a National Government — Executive,
Legislative, and Judicial. But it is significant that the most critical
part of the Convention's work was to fix the powers of the New
Government in respect of finance and trade, a difficulty arising
partly from the fact that these matters are essentially executive
yet require legislative sanction, partly from the fact that the
sovereignty of the States was here most nearly touched. Finally
the new Government was authorised to levy taxes. But there was
much discussion over its right to tax exports, to pass Navigation
Acts and to prohibit the Slave Trade. It was finally decided
that the national legislature might not tax exports, that they
might pass Navigation Acts, and that they must not interfere
with the Slave Trade before 1808.* All inter-State custom-houses
were abolished, and the United States became a Free Trade area,
which was capable of vast expansion.

The Constitution was the work of several able men and one
man of genius, Alexander Hamilton. He urged that the Central
Government must have power to regulate trade, and that a
National Debt would be "a powerful cement of our union ".
His policy was " a foreign loan, a federal revenue, and a national
bank ". Hamilton also strove to strengthen the monarchical
element in the Executive, seeing its value in the case of Great
Britain.

* It should be noted that the prohibition of export duties was not in effect
a limitation of the rights of the Central Government to regulate trade, since the
same prohibition applied to the individual States, which ceased to have separate
custom-houses. Thus there were no trade-regulations denied to the Central
Government through being reserved to the States Governments. The prohibi-
tion meant that export-duties were excluded altogether from the competence of
any government. Again, the limitation as to the slave-trade was merely
temporary, to satisfy special conditions. Thus the conclusion reached was in
effect this : — The Constitution of the United States prohibits export duties :
otherwise all regulation of trade is permitted to the Central Government.

36 IMPERIAL DEFENCE AND TRADE.

The Constitution was a triumph of statesmanship. Its
example has been of immense value to Canada and to Australia.
How far is that example applicable to the British Dominions ?
It can only be partially so ; for the continuity of territory in
the United States rendered possible a real national Government,
a Government which should act upon individual citizens and not
only upon States. In our present conditions, so close a union is
unattainable and undesirable. But the example does show the
immense value of a common commercial and fiscal machinery,
for purposes of that political union, which is in turn the in-
dispensable basis of defensive co-operation. In this respect the
difficulties in the United States then were probably as great as
those which face us to-day. For, though the United States
territory was continuous, communication was slow, difficult,
costly, and sometimes dangerous, over its great extent. Mr.
McLaughlin, in his Constitutional History of the United States,
writes thus : —

" When the people were thinking of themselves they must have
felt their differences more keenly than their similarities. South
Carolina was so remote from Virginia that we might almost think
of her as belonging to the West Indian group of colonies rather than
to the Continental. The Declaration of Independence was known in
Paris almost as soon as in Charleston. . . . When John Adams,
leaving his fireside in Braintree, went to Philadelphia as a delegate
in Congress, the letters which he sent home were welcomed as
tidings from a far country.

" ' Of affairs of Georgia/ wrote Madison in 1786, ' I know as
little as of those of Kamskatska.' When we add to all this the fact
that the colonies were established at different times and from different
motives, and that climate, soil, and industrial life varied greatly
from Maine to Georgia, we are so impressed by the diversity that
union seems almost beyond the verge of possibility."

To-day the telegraph and increasingly rapid navigation
facilitate such work. In the following passage perhaps Seeley
overstates his argument : but it deserves attention : —

" As soon as distance is abolished by science, as soon as it is
proved by the examples of the United States and of Russia that
political union over vast areas has begun to be possible, so soon
Greater Britain starts up, not only a reality, but a robust reality.
It will belong to the stronger class of political unions."

IMPERIAL DEFENCE AND TRADE. 37

It should be added that Hamilton desired Free Trade with
Great Britain. And in the British Parliament Pitt actually
proposed in 1783 a measure for Free Trade with the United
States. This design of two magnanimous statesmen came to
nothing, since no machinery existed for ensuring its continuance.
Under the international conditions which have prevailed hitherto
through the whole of history, such a permanent commercial
bond between two countries implies also a political bond.

CANADA, AUSTRALIA, AND SOUTH AFRICA.
CANADA.

Canada continues the half-broken thread of British-American
history. In this enquiry the whole movement is pertinent, whereby
Canada passed from authoritative Government (1763), through
experimental localism (1774) and Representative Institutions (1791)
to Responsible Government (1840), then to Federal Union (1867)
and incipient nationhood. For Canadian example has guided Great
Britain in her progressive attitude towards the other Dominions
and has also guided them in shaping their own course.

But the immediate topic is Union.

From 1791 French Quebec and English Ontario severally pos-
sessed Representative Institutions without Responsible Govern-
ment. The friction in each Province between an elected Assembly
and an irresponsible Executive culminated in the rebellions of 1837.
Then came the epoch-making Report of Lord Durham, and his advice,
" Let the Colonies govern themselves ". The Act of 1840 initiated
Responsible Government, which came into practical working during
the succeeding twelve years.

The same Act united Quebec and Ontario. This Legislative
Union of the two Provinces was designed to meet special conditions,
and especially to obviate French separatist tendencies. The scheme
proved unworkable owing to local problems of race and popula-
tion. The severance of the two Provinces was inevitable. But
the problem of combining this provincial separation with Canadian
union was solved, after long discussion, in 1867. The two Provinces
were separated, each acquiring its own Executive and Legislature ;
but they were re-united in a Federal bond which included New Bruns-
wick and Nova Scotia, with provision for the possible admission of

38 IMPERIAL DEFENCE AND TRADE.

every part of British North America. An essential part of this Federal
Union was fiscal unity — a free-trade area which, upon the inclusion of
British Columbia, was to extend from Atlantic to Pacific.

Among the many obstacles which stood in the way of Canadian
Federation, two may be specially mentioned : — (i) The difficulty
of applying federation to dependencies controlled from without ;
(2) Difficulties of communication.

The former barrier was overcome by the practical withdrawal
of British control. The second was overcome, for Eastern Canada,
by the construction of the Inter-colonial Railway ; for Western
Canada it was overcome, prospectively at least, by the promise of
a trans-continental railway. British Columbia, having first united
with Vancouver Island (which had been a separate government),
joined the Federation in 1871. But such were the economic diffi-
culties of her isolation from the Eastern part of this Fiscal Union
that, for a time, she threatened secession. For at that time Van-
couver was more cut off from Halifax than Sydney from London
to-day, although in the former case the remedy was perhaps more
immediately obvious. That remedy, the construction of a trans-
continental railway, was only realised with the financial aid of the
Canadian Government, assisted by the guarantee of Great Britain.

The establishment of Federal Union does not mean the final
solution of all problems of Union : for History knows no finality.
But this Union provides a machinery for solving problems as they
arise. Canada furnishes a singular lesson in the reconciliation of
particularist forces, and in national or imperial consolidation : for
Canada is something besides a nation. The diversity of Canadian
origins and the geographical diversity of her provinces are such
that Canada is an Empire in herself.

A necessary antecedent to effective defence and even to national
consciousness was union between the parts ; and an essential part
of that union was fiscal unity.

AUSTRALIA.

The example of Canada bore fruit in Australia, where particu-
larist tendencies were perhaps stronger than in Canada. There was
no continental frontier, no national rivalry, impelling Australia
towards union ; and the absence of racial differences, which looks
favourable to union, simply meant that the racial problems which

IMPERIAL DEFENCE AND TRADE. 39

found their solution in Canadian Federation were non-existent in
Australia. Moreover, the younger Australian colonies had demanded
a separate existence, which was thus an essential feature of their
history They had grown up in sedulous rivalry. Tasmania, Vic-
toria, and Queensland were offshoots from the mother-colony, New
South Wales : distance and difficulties of communication compelled
them to set up separate capitals, the seats of separate government.
South Australia and Western Australia were settled directly from
England ; Western Australia was separated by a wide desert from
the other colonies : Queensland was in great part tropical. But
perhaps the greatest bar to union was the keen rivalry between New
South Wales and Victoria, the richest and most populous of her
daughter-colonies. This rivalry showed itself especially in the jealousy
between the two great cities of Sydney and Melbourne. Moreover,
New South Wales practised Free Trade, while Victoria used Pro-
tection.

Australia, in the path towards union, passed through an inter-
mediate stage which may be compared to the incomplete and ephe-
meral " Confederation" of the United States (1775-88) ; for in 1885
an "Australian Federal Council " was established for those Colonies
whose Legislatures should accept it. This Council possessed legis-
lative but no executive or financial powers. Moreover, New South
Wales did not join it. However, in 1889-90, New South Wales took
the lead in assembling a Convention, with a view to effecting com-
plete Federation. In the course of ten years (1890-1900) three Aus-
tralian Conventions met, besides two Conferences of Australian
Premiers.

Finally, in 1901, the six Australian colonies united in the Federal
Commonwealth, to form one fiscal system, a free trade area com-
prising the Continent and its adjacent island.

The Federal Government has now adopted a definite policy of
self-defence, which would have been impossible before the Union
of the States.

SOUTH AFRICA.

South Africa continues the story, as another example of union
between separate bodies, which first joined in fiscal combination
and then coalesced into a single State. Thus this instance adds to
the cumulative force of our large " supply of facts ". It is another

40 IMPERIAL DEFENCE AND TRADE.

example of the reconciliation of racial and industrial diversities by
the combination of localism* with a large political union.

Yet in this instance the argument for adopting commercial co-
operation, as an element of defensive combination, is weaker than
in Canada and Australia, owing to the very fact that the fiscal divi-
sions of South Africa were a kind of avoidable accident, due to diplo-
matic bungling in 1848-52. At that time fiscal unity was easily
attainable, and it has been a crying need ever since, owing to the
geographical inter-dependence of the provinces. This need was so
obvious that, with the exception of the Transvaal, all the South
African States, including the Orange Free State, had formed a Cus-
toms Union before the recent war. Thus, whereas in Canada and
in Australia fiscal unity was laboriously achieved in the face of great
difficulties, not for its own sake, but as a necessary part of political
union and an indispensable preliminary to effective defence, on the
other hand, in South Africa fiscal unity was an urgent desideratum
in itself : fiscal unity was first achieved for its own sake, and not
for any ulterior political or strategical objects. Thus South African
Union may be compared in this matter to the German Hansa and to
the Argentine Confederation. These were groups of States which
found themselves obliged by circumstances to adopt commercial
co-operation for its own sake as indisputably beneficial and even
necessary in itself. Then political union followed. Nevertheless,
South Africa is another instance of the potent force exercised by
commercial co-operation or fiscal union in forming or cementing
political and defensive union. In South Africa, as in Canada and
Australia, political union, including fiscal union, was a necessary
preliminary to national consciousness and to effective arrangements
for defence.

* The fact that the Constitution of South Africa is more unitary in
character than that of Canada, does not concern the present argument.

CHAPTER V.
ATTEMPTS AT UNION IN SPANISH AMERICA.

Early in the Nineteenth Century the countries of Spanish South
America, having thrown off European dominion, found themselves
faced with the problems of reconstruction. There had been, under
Spanish dominion, six main political divisions, generally corres-
ponding to separate historical acts of settlement in distinct geo-
graphical regions, having separate outlets to the sea. These divi-
sions were (i) Peru, (2) Chile, (3, 4, 5) the three northern tropical
provinces — New Granada, Venezuela, Quito — which may be grouped
together, and (6) the Viceroyalty of Buenos Aires. This last was
an immense and heterogeneous territory comprising the regions of
the River Plate, and of the Pampa, from the Andes to the Atlantic,
and also comprising the remote Andine province of Upper Peru.

As in the time of Spanish dominion, so also after emancipation,
centrifugal forces were strong. The tendency was that every impor-
tant colonial capital should maintain its status by becoming the
Republican capital of a distinct region. But there were two move-
ments which aimed at counteracting this separatist tendency by
a large union of provinces ; first the attempt of Bolivar to hold to-
gether the three northern tropical provinces which had acted together
in the war of independence ; secondly, the formation of the Argen-
tine Confederation.

COLOMBIA.

Of the three northern tropical provinces, the first, New Granada,
occupied the Northern Andes, and found its outlet northwards by
the Magdalena River : the second, Quito (now Ecuador) faced west-
wards, finding its gateway to the Pacific in Guayaquil : the third,
Venezuela, faced generally eastwards by the outlet of the Orinoco
and of the ports connected with the Antillean region. Thus the
obstacles to union (as in the case of British Columbia and Canada)
were difficulties of internal inter-communication, and diversity of
trade routes and of economic interests. In face of these difficulties,
the genius of Bolivar was unable to contend against the prevailing
centrifugal tendency ; and the three provinces, after a brief essay

42 IMPERIAL DEFENCE AND TRADE.

of union under the name of Colombia, finally formed three inde-
pendent Republics.

ARGENTINE.

In the Viceroyalty of Buenos Aires three provinces were clearly
marked off from the rest by geography, namely, Upper Peru, Para-
guay and Montevideo, (a) The province of Upper Peru, which
belonged rather to the Andine and Pacific region, became at once
detached after emancipation, (b) Paraguay, a country chiefly
inhabited by Indians, and self-sufficing as regards the necessaries
of life, chose separation in a manner which precludes analogy in
civilised history : she sealed up the river and declined all external
communication ; (c) Montevideo and the Uruguayan province were
closely connected with Buenos Aires by origin, history, language,
sentiment, kindred, and common action in war. But being separated
from Buenos Aires by the estuary and having separate access to the
sea, Montevideo formed a distinct economic region, geographically
connected with the Brazilian system. Economic and geographical
forces proved stronger than sentiment and kindred ; and for a time
the Spanish province of Montevideo formed part of the Portuguese
monarchy of Brazil. After considerable fighting, a solution of the
problem was ultimately found in Uruguayan independence, an inde-
pendence which was rendered possible — and indeed inevitable — by
the possession of a separate commercial outlet.

Thus three provinces, geographically distinct, were lost to the
Argentine system.

Meantime, in the remaining provinces which stretched from the
Andes to the Atlantic, a struggle was in progress between separatist
and unifying forces. Intrinsically, separatism was the stronger
force, since every prominent city in the interior was intensely jealous
of the predominance of Buenos Aires, and desired to be the capital
of an independent province. But economic forces proved stronger
than the prevailing centrifugal tendencies. The only outlet to the
sea lay through Buenos Aires : thus every province was perforce
connected commercially with Buenos Aires. After long struggles
and repeated attempts at secession, the interior provinces were forced
to accept the fact that, since commercial co-operation was indispens-
able, political union was unavoidable. Eventually an issue was
found in a Federal arrangement somewhat resembling that of Canada.

IMPERIAL DEFENCE AND TRADE. 43

It was not until 1880 that this arrangement was really shaped into
a working form, which after the disturbances of 1890 received clearer
recognition and more practical adoption. About that time the need
of more effective defensive arrangements began to make itself felt.
Since that date Argentine nationality has been a steadily growing
force, which finds one form of expression in a considerable naval
and military organization.

Thus these two South American examples, one a failure, the
other a success slowly and painfully achieved, illustrate three
points : —

(1) That in the absence of commercial or economic bonds,
political union is difficult.

(2) That commercial co-operation or interdependence is a power-
ful inducement towards political union, and a powerful factor in a
nationality comprising scattered and diverse units.

(3) That the permanent stability of defensive arrangements
depends on permanent political union.

Note on the Value of Latin-American Examples. — It would be a
mistake to dismiss these two examples as irrelevant or incongruous.
For the statesmen who were concerned in these movements, at least
in their earlier stages, were men of high attainments and of much
experience in provincial and municipal affairs. Thus these develop-
ments are parts, or at least appendages, of European political history.
But from other unions, or attempts at union, in Latin-America little
is to be learnt. The unity of Brazil is chiefly due to its preservation
of monarchy till 1889 and to its Portuguese origin, which marks it
off in clear distinction from the rest of the continent. Central America
is hardly to be taken as an example, and the history of Mexico is
abnormal. La tin- America possesses two other self-styled " Federa-
tions", where the term is inaccurately used merely to designate the
convenient division of an extensive territory.

In this chapter Colombia is only mentioned by way of illustration,
to provide a contrast with Argentina. But so ephemeral an attempt
at union cannot be included in the catalogue of historical examples.
Accordingly Colombia will not be mentioned again. But the recent
history of Argentina certainly qualifies that Confederation for incul-
sion in the list of unions and federations among peoples of European
origin.

D

44

CHAPTER VI.
APPLICATION OF HISTORICAL EXAMPLES.

" History, while it should be scientific in method, should
pursue a practical object." — Seeley.

In presenting each of these past examples a comparison with
the present problem has been suggested. It remains now to
consider the " accumulation of facts " gathered in chapters
II, III, IV and V, and to consider whether any cumulative indica-
tions can be found bearing on present conditions. Owing to
some differences and uncertainties, it seems best to exclude
Achaea and Lycia from this general examination, leaving for
separate mention such illustrations as they supply. Accordingly
the ten more recent examples, of which we have fuller know-
ledge, must be considered, in order to see whether they present
any common factors as usual or universal elements of success
in defensive union.

These ten examples show no instance of permanently success-
ful defensive co-operation between States without commercial
co-operation. This fact is not always immediately obvious,
because — thanks to the geographical continuity of each group of
States — commercial co-operation has in most cases been carried
to its utmost development, that is to say, fiscal unity. This
means something more than commercial co-operation : it means
commercial combination or coalition. In that case the States
do more than co-operate. They unite, as when two banking
companies unite to form a single bank.

In four out of the ten instances, an attempt was made to
achieve defensive co-operation without commercial co-operation.
In all four cases — in New England, in Switzerland, in the United
States, and in Modern Germany — the attempt failed of permanent
success. In each case, the States acted together in war when
necessity compelled them to do so ; but on the relaxation of

IMPERIAL DEFENCE AND TRADE. 45

pressure they pulled opposite ways. It is true that in one
case — the New England Confederation — the actual decay and
dissolution of the union was mainly due to external causes.
But the short history of its intermittent and half-hearted activity
suffices to show the weakness of its constitution in the matter
of finance and trade. In Switzerland effective union was never
attained until fiscal unity was achieved, in 1848. From that
date, the Swiss Federation passes into the category of successful
and permanent unions ; and its defensive arrangements have
become a model of efficiency.

The example of Germany tells equally in the same direction.
In the United States the evils of commercial and fiscal division
were not the only defects demanding remedy. But these were
the defects most intimately felt ; and it was the need of curing
these economic evils which led to the larger movement for
political union between the Thirteen States.

Thus, out of the four examples of failure in defensive union,
three were turned into success after the removal of this defect.
This point demands careful scrutiny ; for obviously the argument
propter hoc quia post hoc is not a sound one, unless similar
results following similar conditions can be traced in many
instances. The argument in this case can be stated thus : — -
In every case of successful defensive union, we find commercial
co-operation or combination as part of the inter-State arrange-
ment. In four cases this factor was absent, and the union
proved to be an unstable and intermittent one. In three of
these four cases, this economic defect was supplied, and the
defensive union became a success.

To sum up, there are nine examples* of successful defensive
union between States, in which commercial co-operation has been
a condition of the union. Usually, commercial co-operation has
merged into fiscal unity, that is to say into commercial amalgam-
ation, as an essential part of national union. On the other hand,
it is always impossible to assert a negative : but the present

* The nine examples are the German Hansa, the Dutch Provinces,
Switzerland, Germany, the United States, Canada, Australia, South Africa,
the Argentine Confederation. Japan might perhaps be included so as to make
ten examples. But it seems better to confine the enquiry to unions among
States of European origin, merely mentioning Japan by way of illustration.

46 IMPERIAL DEFENCE AND TRADE.

writer has been unable to discover any examples of permanently
successful defensive union without commercial co-operation.

DEFENSIVE ORIGIN.

Since defensive co-operation is the main subject of the thesis,
the defensive motives of these unions should be particularly scru-
tinised. Four of these unions were definitely formed for purposes
of defence, namely : The Dutch Republic, the Union of New Eng-
land, the Swiss Confederation, and the German Hansa, which was
a union formed for defence of trade : it may almost be said that
these four unions had no other object than defence. In the United
States, defence had been the sole object of the first movement towards
common action, out of which were developed first the imperfect and
short-lived " Confederation ", then the fuller national Union : and
it is obvious that among the motives which led to that closer union, a
prominent motive was the urgent need of that consolidated strength
which was essential for self-preservation. That same need — the
need of union for defence and for self-preservation — was also a leading
motive in the formation of the German Confederation in 1815, out
of which grew the closer union of the German Federal Empire, when
the defects of the Confederation had been remedied and stronger
bonds had been contrived. In the remaining cases — Argentina,
Canada, Australia, South Africa — the immediate need of defensive
strength was not so urgently prominent. Yet this need was not
invisible or unfelt. It is certain that the federation of Canada would
have been much more difficult but for her long defenceless frontier
and the unconcealed ambitions entertained at that time in the United
States for the absorption of Canada into their republican union.*
In Australia there is no doubt that the advance of other Powers in
the Pacific was an inducement to union, f In South Africa the same
motive was present ; for the examples of Canada and Australia had
proved that union meant strength : recent experience had shown
that the danger of European interference in South Africa was not

* " Macdonald . . . realised the danger lest Americans should occupy the
hinterlands of Canada and intercept the road to the Pacific." — Prof. Egerton.
Federations and Unions in the British Empire.

f " It was the threat in 1883 of the Germans in New Guinea which first
act Australian public opinion moving in the direction of federation " (ibid.).

IMPERIAL DEFENCE AND TRADE. 47

totally imaginary : moreover, a strong motive of union was the need
of a uniform attitude and policy towards the indigenous inhabitants,
a need which was, in a sense, a defensive or preservative one.

DEFENSIVE RESULTS.

The value of permanent political union as a defensive measure
requires no proof. But since every one of these unions proceeded
by way of commercial co-operation or fiscal unity, logical complete-
ness demands some consideration of defensive results. Those results
have already been indicated in each historical case. Among recent
instances, Germany, Switzerland, and Canada well show the prac-
tical defensive results of union. But the example of Canada is par-
ticularly apposite. For the radical change in the attitude of the
United States towards Canada during the past generation illustrates
the defensive value of union, viewed merely as a moral power, peace-
fully operating without the exhibition or menace of force. Canada
now speaks as a nation to a nation, not only as she faces towards
Great Britain, but also as she faces towards the United States. For-
merly that republic was bordered by a line of detached British pro-
vinces, whose actual status was unlikely to be a permanent one ;
thus they might reasonably be regarded as likely to share the destinies
of Florida, Texas, and California. Now the United States see across
their border a united nation, to be treated with respect.

The very fact of union, the consciousness of nationality and of a
distinct national destiny, the quiet assertion of a national and inter-
national position, the manifestation of national dignity, the " sense
of a great citizenship"* felt by all the people, and showing itself in
their collective national attitude — these things are in themselves
a strong defence, representing, as they do, resolution, vigour, and
solidity, in place of something provisional and unstable.

Accordingly, so far as the evidence of these examples goes,
it appears, first that commercial or fiscal co-operation has been
found in the past an indispensable element in forming permanent
defensive union between States ; and secondly that commercial
co-operation or fiscal combination has been found in the result
to be a potent factor in forming or cementing union and so
strengthening it for defence.

* Dilke.

48 IMPERIAL DEFENCE AND TRADE.

Thus, looking backwards, the enquirer gathers from the
historical method a definite conclusion, which may here be stated
with all possible emphasis. This conclusion is that self-governing
States have failed to co-operate permanently for the purpose of deftnct
without co-operating for the purpose also of trade.

GEOGRAPHICAL CONDITIONS.

The question occurs whether any reason can be found which
may render this historical conclusion, derived from accumulated
instances, inapplicable to Greater Britain. It has been already
pointed out that, in every example which has been examined,
the group of States formed a clearly defined geographical area,
whereas the States of Greater Britain are scattered over the
globe. This geographical dispersion is a serious obstacle to fiscal
combination or commercial co-operation.

The necessity of defensive union being assumed as an axiom
in the thesis, then — for the very reason that it is more difficult-
commercial co-operation is more important, if it is in truth
essential to defensive union. For, just as commercial co-operation
is more difficult in the case of these scattered communities, so
also any other form of co-operation is more difficult for the same
reason. The bond between Great Britain, South Africa, Canada,
Australia, and New Zealand will be liable to more severe strains
owing to possible divergence of interest or world-policy than
the bond between the six Australian States. Thus the bond
between the Dominions of Greater Britain must be strong enough
to stand any strain. In proportion as it is more difficult, so
much the more is it essential to supply all the elements of
permanent union, since the difficulty in supplying each essential
is in part the measure of the difficulty in effecting permanent
defensive union. Moreover, mere visible contiguity or neighbour-
hood, as shown on a map, is apt to be misleading. For instance,
British Columbia still forms an economic area distinct from the
rest of Canada. For that reason union was extremely difficult
and was for a time unstable, nor can it be said that a really
satisfactory and harmonious financial arrangement has been yet
reached. Again, there were serious obstacles and delays to
Australian union, first owing to economic differences and

IMPERIAL DEFENCE AND TRADE. 49

geographical distinctions between Queensland and the rest of
Australia, then owing to similar differences between Western
Australia and the rest of the Continent : and it must still
take some time before the resulting friction becomes completely
smoothed away by the growing and habitual sense of the benefits
derived from union. Even in the case of Great Britain and
Ireland, economic differences are so marked that the customs
union of the two islands does not work with entire smoothness.
In all these cases grave difficulties were overcome and are now
daily overcome for the sake of unity— difficulties perhaps scarcely
less than those which surround the present problem.

To say "it is impossible " is simply to shirk the question :
for the immediate problem before us is not whether commercial
union is practicable, but whether defensive union is practicable
without it. The question whether commercial union is practicable
and, if so, in what way, is a supplementary problem to be
treated separately later. This supplementary problem must not
be allowed to colour the lesson learnt from history.

Nevertheless, the main question of possibility is not here
totally irrelevant, since the sentence "it is impossible " simply
denies that the historical cases are examples at all : it denies
analogy.

The two " schools of thought " to which the editor of United
Empire (March, 1913) referred in announcing the theme, are both
equally agreed upon the necessity of defensive co-operation. But
they will differ in their comments concerning these historical
examples. For the sake of clearness, their probable or obvious
comments may be put into words thus.

The one school will say : —

" Commercial union is not only feasible but also indispensable
between contiguous States or between adjacent islands forming a
clearly denned national territory. In such cases custom-houses
between the States and divergences of fiscal policy are so in-
convenient and so irritating that they bar effective union for any
purpose, and must of course be swept away. But in the case of
communities separated by oceans, this irritating inconvenience of
fiscal separation is not felt. In this case fiscal or commercial
union is impossible. Therefore, if past precedents indicate that
commercial union is indispensable for defensive union, we reply
that these precedents cannot guide us. We must make a new

50 IMPERIAL DEFENCE AND TRADE.

precedent. Defensive union must be made practicable without
commercial union . ' '

The other school will say : —

" Precedents indicate that commercial union is essential to
defensive union. If we are told that present conditions make
commercial union impossible, then we reply that in the light of
past experience commercial union must by some means be made
practicable, in order to ensure defensive union."

So far as the use of " accumulated facts" goes, it is evident
that the second school uses the " historical " or " scientific "
method, and that the first school makes the larger assumption.
That is to say, those who regard commercial union as an in-
dispensable condition of defensive union accept the teaching of
history. Those who take a contrary view reject or explain away
the teaching of history.

CITIZENSHIP AND GOVERNMENT.

The denial of historical analogy, the argument "it is im-
possible in this case ", may be stated from another point of
view thus : —

" Alexander Hamilton and his colleagues were determined to
convert the unsatisfactory ' Confederation ' of the United States
into a ' National Government '. By a National Government they
meant a Government which should act not only upon States but also
upon individuals, a Government in which every citizen should feel
himself to be concerned, supporting it by payment of taxes, owing
obedience to its tribunals and legislature, and claiming, in the face
of the outside world, citizenship in that Government. Thus Massa-
chusetts and Virginia are not nations, as Canada and Australia claim
to be nations : the States of the American Union might rather be
called Provinces enjoying partial autonomy, like the Canadian
Provinces or the several Australian States. And in the other cases
of union, the provinces or States never possessed nationhood, except
perhaps in the doubtful case of Germany, where they surrendered
that nationhood. Thus in all, or nearly all, these cases the central
authority is a National Government which acts on all the citizens.
Geographical conditions and political claims in the British Empire
preclude the creation of such a central National Government. There-
fore these historical examples are not applicable to this case."

This argument tends towards the quagmire of abstract theory
and unprofitable definition. It leads us to examine the difference

IMPERIAL DEFENCE AND TRADE. 51

between a Bundesstaat (bonded-state or group-state or federal-
nation), where the central government touches everybody, and a
mere Staatenbund (bundle of States or Nations), where the
government only touches States, and it is the several State
governments which touch everybody. The following comments
suggest themselves : —

(1) Leagues of cities, such as the Achaean League, the Lycian
League, and the German Hansa, have some features of both forms
of union. It is not desired here to press the analogy from city-leagues ;
but it has a certain cumulative force, and so adds something to the
reply to this objection.

(2) Modern Germany partakes of the nature of both forms of
union, since the German States vary much in the degree of their
autonomy or federal attachment. The historical and actual sense
of nationhood is strong in the chief German monarchies, such as
Bavaria, Saxony, and Wurtemberg. Several of the States maintain
separate diplomatic relations and the other visible apparatus of
distinct national existence. Bavaria, in addition, has a separate
Post Office and a separate War Office and military organization. In
historical, religious, social, temperamental, and traditional ways
Bavarian sentiment is anti-Prussian. In fact, the Prussian pro-
bably seems as much a foreigner to the Bavarian as to the Austrian :
the scurrilous cartoons of the Kaiser which appear, unchecked by
any censorship, in Bavarian periodicals, illustrate this sentiment.
Yet German union has overcome these national feelings of localism
and animosity. A working federal system has been created. The
States are bound by a customs union and a defensive union.

(3) It is not right to assume the impossibility in the present case
of creating a central authority which shall be in touch with individual
citizens. A government such as that of the United States, in daily
intimate touch with all the people, is probably impracticable. But
it may be possible to create a government which shall concern indi-
vidual citizens. Putting aside the possibility of some customs arrange-
ment, other possible modes of contact are : (a) Election, whether
direct or indirect, of representatives on the Central Government ;

(b) Decisions of the Imperial tribunal, however rare, on civil cases ;

(c) Public debt and payment of interest ; (d) Interchange of gar-

52 IMPERIAL DEFENCE AND TRADE.

risons and ships' crews ; (e) Conceivably even some form of taxa-
tion.

(4) The denial of analogy and of the possibility of a real national
Government again begs the whole question. This denial may tell
equally against any kind of permanent co-operation. In short,
such a denial substitutes assertion for the " historical " or " scientific "
method.

SOME FEATURES OF THESE HISTORICAL EXAMPLES.

The main subject of this chapter has been concluded. But there
are certain lessons to be drawn from these examples concerning
the general topic of union. These points may be briefly mentioned.

Modification of Bonds. — The examples of Switzerland, of Canada,
of the Netherlands, of the Argentine Republic — perhaps also of
Modern Germany — illustrate the fact that bonds of union which
are felt to be unsatisfactory either as being irksome or as obsolete,
must be modified or undone as an essential condition of permanent
co-operation. This truth is in itself sufficiently obvious : but tra-
ditional sentiment is apt to ignore it, in clinging to long-standing
arrangements. At the present time such arrangements as do not
satisfy modern requirements between Great Britain and the Domi-
nions are being modified, not by sudden demolition, but by the usual
British method of gradual piecemeal substitution.

Preponderance of one Member. — The examples of the Dutch
Republic, of the New England Confederation, and of the Argentine
Confederation show that the excessive preponderance in wealth,
population, and strength, of one member is apt to be a cause of fric-
tion, dissatisfaction, and weakness in a union. Thus, Australian
Federation only became possible when the growth of Victoria annulled
the preponderance of New South Wales. The exceptional case of
Germany does not counterbalance these indications.

At the present time there is one predominant partner — tech-
nically occupying a position of more than partnership — in the British
Empire. But this inequality is gradually correcting itself, with the
rapid growth of Canada. And meantime British constitutional
methods are such as may succeed in tiding over this difficulty.

Subject Lands. — When a number of States, forming a homogeneous
group, have at their common disposal either some dependent ter-

IMPERIAL DEFENCE AND TRADE. 53

ritory or some unoccupied lands awaiting development, their united
action, in administering such a common interest, provides a strong
support of union. This appears in the case of the Dutch Republic,
the United States, the Canadian Federation, the Modern German
Empire, and the Argentine Confederation. The South African Union
may be added, since the lands inhabited by natives are in some degree
the concern of the whole Union : besides, provision is made for the
future admission of other African territory into the Union. A similar
factor in common action appears in the German Hansa ; for the
settlements of German merchants in foreign towns were dependencies
of the whole League. Obviously the administration of dependencies
and the exploitation of vacant lands are in part economic activities
exercised in common, since they involve questions of finance and of
profitable expenditure affecting the whole body. There are no such
common subject or public lands now in the British Empire. But
some common action in administering the actual dependencies of
Great Britain is not inconceivable in the future.

Sentimental and Interested Motives. — All the economic matters
discussed in this chapter illustrate another point. Not one of these
unions was formed or maintained solely or even principally by virtue
of sentiment. In every case the union was formed either to remedy
some inconveniences or to achieve certain definite objects which
were felt to be conducive to the public welfare. And one union after
another has been shaken by dissidence and strife when the union
was felt by any part not to be effecting its object of practical benefit
to all. In Germany and in Switzerland, the religious controversy
of the sixteenth and seventeenth centuries was not the only cause of
intestine struggles. In the Dutch Republic, the recurrent civil strife
was mainly due to social, economic, and political discontent. In
the greatest and most vigorous of these unions — the classical type
of successful federation — when a serious dissidence arose, the senti-
ment of three generations of union in war and peace did not suffice
to avert an attempt at secession, leading to the greatest civil war
of modern history. In order to maintain stability, the union of a
group of States must rest on a general conviction that the mainte-
nance of the union is practically beneficial to all the States. The
support of Government, whether in a unitary State or in a national
union of States, must be found in interest, that is to say, in the sense
of public welfare. The justification of all government is the benefit

54 IMPERIAL DEFENCE AND TRADE.

of the people. This truth is here stated generally, as indicated by
the uniform evidence of historical examples. In the next chapter
it will be re-stated as illustrated by present conditions in Greater
Britain.

CONCLUSION OF THE HISTORICAL ENQUIRY.

Before entering upon the second part of the thesis, it is well to
re-state distinctly the lesson indicated by this historical enquiry.
The conclusion is that self-governing States have failed to co-operate
permanently for purposes of defence without co-operating also for the
purpose of trade. Thus the lesson of History is that, in the past, com-
mercial union has been generally found to be an indispensable condition
of defensive union.

55

PART II.

TENDENCIES OF THE AGE.
" History without Political Science has no fruit." — Seeley.

" Cobden had the philosophic gift of feeling about society
as a whole and thinking about the problems of society in an
ordered connexion with one another." — Morley.

" Historical study does more than anything else to lead the
mind to a definite political creed ; but at the same time it
does at least as much to hinder the growth of political partizan-
ship." — Freeman.

57

CHAPTER VII.
GENERAL TENDENCIES.

[Note.— This part of the enquiry is the most difficult to handle in a
scientific spirit. The student must strive particularly to
treat all observations in a co-ordinate manner, regarding the
tendency of the time as a matter of evolution, to be traced
in continuous connexion with what has gone before. It is im-
possible to avoid the use of controversial works, but he must
treat them simply as quarries of facts, suspending judgment
concerning the conclusions of their authors.

An examination of tendencies naturally falls into two parts,
first the trend of political movements throughout the world—-
this is the subject of the present chapter ; secondly the
trend of opinion, of legislation, and of political suggestion or
action in Great Britain and the Dominions — this will be
treated in the other three chapters of this Part.

Since every union or federation of States is, by its very
nature, in a greater or less degree defensive in character,
all the unifying or federal tendencies of the age must first be
briefly indicated. Then the commercial aspect of these move-
ments must be reviewed.]

" We live in a Federal Age ", wrote Dilke in 1890. It would
be more accurate to say "an age of unification". Since the
middle of the nineteenth century, there has been a tendency
to strengthen the functions of central authority in every group
or system of States united by a political bond. Whether the
central authority is moulded into a federal or a unitary form,
or into a compromise between the two, is usually a matter partly
of geographical convenience, partly of ethnological and political
aptitudes. The line separating the two systems cannot be very
sharply defined. Between the extremes of complete Federation
and complete Unitary centralisation there are many gradations,
which shade imperceptibly into one another, the gradations
consisting in the degrees of State autonomy or provincial
administration or local government.

58 IMPERIAL DEFENCE AND TRADE.

The year 1848 brought the first effective Federation of the
Swiss Cantons. A dozen years later the United States plunged
into a civil war, to vindicate the predominance of Federal rights
over State rights. This victory has been sanctioned and strengthened
by later events and movements, especially by the great inter-
national position assumed during the last sixteen years by the
United States : this position, which renders necessary a strong
central executive, gives an access of authority to the utterances
of the President and the Secretary of State, and thus strengthens
the monarchical element in the Constitution of the United States.

Hardly was the American war concluded, when the union
of the Provinces of Canada into a federated Dominion was
accomplished. Four years later (1871) came that proclamation
of the German Empire which was the conclusion of half-a-century
of effort. Twelve years later was assembled the Australian
" Inter-Colonial Convention ", the first public official step in the
movement which was to lead to the Australian Commonwealth.
Next came the union of the South African States. Some partial
steps have also been taken towards the union of some of the
West Indian Islands into larger groups. The unification of Italy
and the unification of Japan are movements which, each on
different lines, illustrate the same tendency. Japanese unification
was achieved in the face of immense geographical and social
obstacles ; and its object was distinctly self-defence. The uni-
fication of New Zealand, through the abolition of the " pro-
vincial " governments in 1874, opened the way in that archipelago
to national growth, without which national schemes of defence
are impracticable.

These unions naturally have their fiscal or commercial aspect.
The result of the Civil War in the United States merely per-
petuated the previously existing customs union or fiscal union
of all the States. The formation of the German Empire, by
providing a Federal Government for the members of the
Zollverein, strengthened and permanently established that union,
vastly enlarging its activities in all matters of trade and com-
munication. On the other hand the formation of central Govern-
ments in Canada, in Australia, in South Africa, in Italy, and in
Japan involved in each case the abolition of all internal custom-
houses or tolls (other than municipal) and the creation, in each
case, of a comprehensive fiscal union.

IMPERIAL DEFENCE AND TRADE. 59

The three Scandinavian monarchies have a partial judicial
union, besides a common mint and a postal union, the two last
being matters connected with trade. There is now a movement
on foot in the direction of a closer union to start from these
beginnings.* It is noticeable that the dissolution of unsatis-
factory terms of partnership between two of the members was
a necessary antecedent to these proposals of union.

Even in the West Indies, where the difficulties of a general
union or federation appear to be insuperable under present
conditions, a commercial convention has met representing all
the British dependencies in that region : and here seems to be
a possible germ for some general co-operation of all those
communities, f

Finally, there are indications of a desire for commercial
union among the South American Republics of the Andine
region. J Other schemes of permanent alliance or defensive union
in South America, although not wanting in significance, have
not been carried beyond the stage of tentative discussion.

* COPENHAGEN, JUNE i, 1913-

King Gustav of Sweden, escorted by four torpedo-boats, arrived at Copen-
hagen to-day, and was received by King Christian. King Gustav will stay
here until Tuesday as King Christian's guest. The liveliest interest is shown
by the whole of Scandinavia in the visit, in that the idea of an inter-Scandi-
navian union is now much discussed. Already it is pointed out that the three
Northern countries have now a mint and a Postal Union, and the civil judg-
ments of each country are enforceable in the others. — The Times.

f When a Canadian Reciprocity Agreement was first suggested, a general
council of representatives from the various islands and possessions met in Bar-
bados to discuss among themselves and with Canadian delegates the advisa-
bility and feasibility of such a scheme. Perhaps in this Council we may see
the beginnings of a general council which may meet for the discussion of ques-
tions of internal as well as external importance. — The Times, May 24, 1912.

I VALPARAISO, MAY 28, 1913.

General Montes, the President-Elect of Bolivia, who is passing through
Chile, in conversation with various eminent men, urged the convenience of a
Customs confederacy between Chile, Peru, and Bolivia. Emphasizing the need
of Bolivia for an outlet to the Pacific, he hinted that Chile should cede Arica
and the land on both sides of the Arica-La Paz Railway. Public opinion, how-
ever, is against this, in view of the need of isolating the nitrate region from
the neighbouring Republics. Otherwise, opinion seems unanimous in the desire
for closer relations with bordering countries. The welcome given to the Chilean
delegation at the inauguration of the Arica-La Paz Railway has been most
cordial, and in itself signifies the desire of both nations to draw closer together.
— The Times.

E

6o

CHAPTER VIII.

EXISTING LINKS BETWEEN GREAT BRITAIN AND
THE BRITISH SELF-GOVERNING STATES.

Before considering present tendencies in the matter of co-operation
in Greater Britain, it is necessary to realise actual conditions ; since
it is of little use to examine developments, unless we first clearly
know what it is that is being developed.

SENTIMENT AND OPINION.

It is a commonplace to say that the principal bonds between
Great Britain and her daughter-nations are bonds of sentiment, of
domestic affinity, and affection ; that the links are spiritual threads
rather than solid legal chains ; that these communities are bound
together by identity of origin and consequent similarity of character
and of national ideals, by common memories and common aspira-
tions, by a general identity or similarity of religious and social views
or tendencies, by community of speech, of literature, of customs, of
family life, and modes of thought ; in short, by those elements which
usually contribute to form nationality within the frontiers of a self-
contained national territory.

This view implies that the only obstacle to a visible and compact
national unity is a geographical accident, that the nation is only
divided by the estranging sea. Here lies the crux. All the elements
of nationality are present except one, which has been generally
deemed the most essential of all, namely, inclusion within a self-
contained national territory.

Moreover, the often-repeated doctrine concerning the general
identity or similarity of institutions and ideals in all the Britains,
and concerning the racial and psychological bonds uniting them, is
indeed a true doctrine ; but it is not the whole truth. For the pur-
pose of clear elucidation — not for the purpose of damaging criticism-
two observations may be made. In the first place, similar language

IMPERIAL DEFENCE AND TRADE. 61

is frequently used concerning the relations between Great Britain
and the United States by Englishmen and Americans of competent
knowledge and authority. . In fact, many of these Anglo-American
speeches would serve, with merely a change of name, for patriotic
expressions of British inter-State amity. This comparison, while
by no means damaging to the force and truth of the sentimental and
racial doctrine of imperial unity, nevertheless does detract consider-
ably from the scientific value of that doctrine as an attempt to define
the foundations of permanent and binding political conditions. It
is worth noting that a United States fleet, on a recent visit to Aus-
tralia, was there received with an enthusiasm at least equal to any
contemporary manifestation of British feeling.* And, indeed,
in one important matter, the attitude towards the yellow races, Aus-
tralia and New Zealand are more in sympathy with the United States
than with Great Britain, f

In the second place, this racial, social, and sentimental definition
can only be accepted with reservations. For it does not completely
apply to the French of Canada or to the Dutch of South Africa. It
is not to be expected that the Canadian descendants of Mont calm's
men should be inspired by the same inherited traditions, the same
racial sentiments, as the descendants of those who fought under
Wolfe. And it is frequently remarked by observers that the patrio-
tism of the French in Quebec is Canadian rather than British, and
that any schemes of closer imperial union are not viewed by them
as matters of sentiment at all. They are viewed as practical matters,
to be judged by asking the question, "Are these things useful and
good for Canada or not ? " The most that can be said about French-
Canadian feeling in this respect has been said by Mr. Benians : —

* Mr. Arthur Myers, Minister of Finance an<} Defence in the last New Zealand
Cabinet, said : " The effect of this on New Zealand itself is that to-day we find
ourselves having to rely for naval protection on a Power which is now bound to
England by a treaty of alliance but which may become in time by a turn in
events not a protection but a menace. We are not content to leave our pro-
tection in the hands of the Japanese Fleet. Therefore, we have resolved to
make a start in having a navy of our own, under our own control, manned by
our own people, and in time, we hope, built in our own yards." — 1913.

\ This is true with regard to attitude and the general inclination of policy.
On the other hand, in respect of actual foreign policy at the present time, it
should be stated that the existing Treaty with Japan embodies an understanding
reached between Great Britain and the Dominions at the Imperial Conference
of 1911.

62 IMPERIAL DEFENCE AND TRADE.

" The French community has acquiesced in, if it has not sympathised
with, every step in the expansion of Canada, and even in uncon-
genial imperial activities and ambitions."*

Nor can it be argued that the adhesion of the Dutch Afrikanders
to the British Empire is the result of warm affection and inherited
sentiment. Both French in Canada and Dutch in South Africa
cling to their own language and their own ways. Indeed, their acquies-
cence in the comprehensive British system of which they form a
part is mainly due to the fact that their language and native institu-
tions— which are not British — are respected by British authority.
Both these non-British communities were drawn into the British
body-politic under pressure of events uncontrollable by themselves.
Both of them accept their present position because it suits them to
do so.

This brings us to the main point. Sentiment, tradition, and
conservative historical feeling are not, in themselves alone, adequate
bases for any permanent system of government. The object of
government is the benefit of the governed, and no constitution has
the right to subsist unless it fulfils that condition. The only adequate
justification for the maintenance of the political bond between the
States of the British Empire is the conviction that this bond is bene-
ficial to these communities. If at any time it can be demonstrated
that complete independence would be a better system of govern-
ment for the autonomous States, then the very raison d'etre of govern-
ment demands that the better system be adopted. No Government
has the right to survive its usefulness.

In this matter the example of the North American Colonies
is rightly regarded as the classical example. In 1760 the union
between Great Britain and those colonies appeared indissoluble.
The conquest of the French in Canada removed the most potent
motive for the continuance of that union and prepared the
way for its dissolution. A century later the American Union
itself was only saved from dissolution over a domestic question
by civil war. The unforeseen always happens ; and a union,
in order to be permanent, must be strong enough to withstan
unexpected shocks and those divergences of sentiment whic
must inevitably occur. It must be capable of resisting an

* Camb. Mod. Hittory, Vol. XI.

IMPERIAL DEFENCE AND TRADE. 63

blow, short of those elemental catastrophes which change the
face of the world and introduce new eras.

It should be noted that serious differences have lately occurred
between the Federal Government of the United States and the
State Government of California about Californian legislation
concerning Japanese immigration. The Civil War in the United
States has placed the Union on a basis firm enough to resist
the dangers of such dissidence : but the incident is a warning that
any political union must be placed on a basis strong enough
to withstand such cases of divergence, which are quite sure to
arise ; and a firm basis cannot be constructed of sentiment
alone. A less serious divergence concerning the same matter,
between British Columbia and the Federal Government of Canada
provides another warning. Sentiment did not suffice to unite and
to hold together the Pacific and the Atlantic provinces of Canada.
"Through many difficulties ", says Mr. Benians, " the little group
of British Colonies had been steered into the broad path of their
common interest." Dilke has observed the business-like character
of the colonies, and declares that their first question concerning
any proposal is " What is it for ? " In 1883 Seeley remarked : —

" There are in general three ties by which States are held together :
community of race, community of religion, community of interest.
By the first two our colonies are evidently bound to us, and this
fact by itself makes the connexion strong. It will grow indissolubly
firm if we come to recognise also that interest bids us maintain
the connexion."

As has been already indicated, the community of race and
of religion is not so complete as Seeley states. So much the
more telling is the last sentence of the quotation.

Ireland is a standing example that local sentiment may be
stronger than the sentiment of union ; that the removal of
grievances and the enjoyment of the benefits of government
are the true bases of content and loyalty. The fact is that
patriotic sentiments may pull opposite ways. We have been
watching the growth of nations : we constantly hear of the
national dignity of Canada, of Australia, of South Africa, of
New Zealand. Both common sense and repeated experience
warn us that at some crisis the nearer sentiment of local
nationality may clash with the more comprehensive sentiment of

64 IMPERIAL DEFENCE AND TRADE.

union and imperial attachment. In order to meet such crises,
our union must be strengthened by general belief that it is
beneficial, and by a constitutional framework which may help
to give it stability.

No civilised government can rely mainly upon popular
sentiment. Every government is constantly striving to convince
the citizens of its usefulness and beneficence, and to justify its
existence by beneficent activity. And union between remote
States, owing to its very difficulty, must rely more than all
upon the consent and conviction of the people that the union
does them good.

During the past twenty years there has been a very noticeable
growth in the sentiment or body of opinion which unites the
British self-governing States. The terms of the present thesis
illustrate this growth, which is treated in the next chapter.
Well, it is constantly avowed in the Dominions that this growing
sentiment rests on the conviction of the benefits conferred by
union. The fact is that the Dominions, in growing to national
self-consciousness, have realised their position, and have become
convinced that their strength, security, development, and pros-
perity are aided by the bond between them and Great Britain.
Accordingly they have become more anxious to preserve that
bond, because they are convinced that it is good for them.
Thus, to those who hold that the Empire is held together not
by interest but by sentiment, the obvious reply is that the
sentiment which holds together the Empire is supported and
nourished by interest, that is to say by a better instructed
concern for the public welfare*. The existing union is built
upon good and useful work done in the past. The continuance
and development of that union must rest upon the continuance
of good and useful work.

It is impossible to dissociate sentiment and opinion. The
word " sentiment " seems rather to imply feelings which resemble

* Sir Frederic de Waal, in the course of his speech, said : — " If to-
morrow there were no British Navy, the liberty of Canada and Australia
would be in danger, and the liberty of South Africa would be even more
so, because of the important strategic position which they occupied on
the great trade route to the East." Sir Frederic de Waal was formerly
a stalwart of the old Cape Bond. — The Times, 1913.

IMPERIAL DEFENCE AND TRADE. 65

natural and innate affections, whereas the word " opinion " denotes
the result of a deliberate process of thought. Yet in fact most
people hold their political opinions or beliefs as if they were
matters of sentiment. The average man, when his opinions are
impugned, is much more ready to reiterate them with warmth
than to defend them with reason. He talks as if he must know
by intuition what is intrinsically right and just, when in fact
he is merely stating what he believes to be expedient. And
what is true of individuals is still more true of crowds and
communities of men. Sentiment and opinion support one another,
pass into one another, and are indistinguishable from one another,

Accordingly, the force and significance of sentimental bonds
is not here denied. On the contrary, they are emphasized.
To deny them would be to deny in great part the ethical bases
of society. But to dwell principally on considerations of senti-
ment, apart from the solid reasons which support that sentiment,
is a rhetorical and literary method rather than a scientific one.
The student of politics has to deal with the development and
working of institutions, and he must view characters and motives
with reference to the institutions through which these motives
express themselves.

It is important therefore to state clearly what are the technical
and constitutional bonds which actually link Great Britain and
the self-governing Dominions. And here the difficulty occurs
which Bagehot stated, writing forty years ago about the British
Constitution : " There is a great difficulty in the way of a
writer who attempts to sketch a living Constitution . . . The
difficulty is that the object is in constant change ". Thus the
writer who describes existing constitutional arrangements is in-
evitably led to attempt some estimate of their tendencies and
of movements which are actually in progress.

CONSTITUTIONAL LINKS.

(i) The Crown.— The King of England, Scotland, and Ireland is
also Rex Bntanniarum omnium. The coinage of the whole Empire
bears his effigy, and all executive acts are performed in his name.
For the present topic, the most interesting function of monarchy
is the nomination of Governors or Viceroys in each of the self-govern-
ing Dominions. The method of their nomination need not here be

66 IMPERIAL DEFENCE AND TRADE.

examined. The point is that they exercise the functions of consti-
tutional monarchy, that they are visible embodiments of the mon-
archical principle accepted by all the States, and that they repre-
sent the person of the Sovereign. A curious proof of the value
attached to this institution, and particularly of the sense of dignity
pertaining to it, is to be found in Australia. When the six Australian
States formed a Federal Union or Commonwealth in 1900, it was
arranged that Royal Governors should continue to be sent from
Great Britain to each of the six States. The arrangement is an incon-
gruous one, adopted in deference to local sentiment. The Australian
States preferred not to follow the more logical example set by the
Canadian Federation, where the Lieutenant-Governors of the Pro-
vinces are Canadians nominated by the Governor-General of Canada.

(2) A Supreme Court of Appeal. — The Judicial Committee of the
British Privy Council at present serves as a Court of Appeal for all
the Dominions. The existence of this tribunal may be the means
of providing an inter-State Court of Appeal bearing a more compre-
hensive character. And this is actually being done by the inclusion
in the Judicial Committee of judges from the Dominions. There
are now seven oversea members of the Judicial Committee of the
Privy Council.

Lord Haldane has since suggested a closer judicial unification,
proposing that the " King in Council ", that is to say, the Judicial
Committee of the Privy Council, shall be the Supreme Court of Appeal
for the whole Empire, including Great Britain. After dwelling
upon the great history, the high repute and the convenient elasticity
of this tribunal, he suggests that the Court might, upon convenient
occasion, sit in several " divisions " in different parts of the Empire.
For instance, in order to settle some Canadian case, it would be easy
to transport two English judges to Canada, who might in session
with two Canadian judges and an Australian judge constitute the
Judicial Committee of the Privy Council, and thus sit as a " division "
of the Supreme Court of the Empire. The Lord Chancellor's striking
suggestion demands to be recorded here as indicating possibilities
in the way of union. But it is best here to treat the proposal merely
as an indication of possibilities.

(3) Veto on Legislation.— The Crown, that is to say the British
Government, which now acts, perhaps provisionally, as the Imperial
Government, has theoretically the right of veto on legislation by

IMPERIAL DEFENCE AND TRADE. 67

the Dominion Parliaments. Practically this privilege only amounts
to the power of disallowing measures which are at variance with
the international obligations of the Empire. Development in this
department of Imperial supervision is a more complicated and deli-
cate matter, and is connected with the question of the Treaty-making
power and the direction of Foreign Policy. Development in all
these kindred matters must go together. Means of development
may be found through the quadrennial Imperial Conferences,
through the permanent Committee of Imperial Defence, and
perhaps even through the Imperial Court of Appeal ; for, as the
example of the United States shows, a Supreme Tribunal, by its
interpretation of laws and of the Constitution, may exercise a check
upon legislation and practise something of a legislative and even
of an executive function.*

(4) The Imperial Conference, — This quadrennial meeting of the
Prime Ministers of all the self-governing States is now an established
institution. It has no technical authority, no powers conferred
upon it. It is merely a council meeting for suggestion and discussion.
But its significance is beyond measure, for it is in effect a meeting of
the Heads of States, that is to say, of those magistrates who are

* The Lord Chancellor delivered the judgment of the Judicial Com-
mittee of the Privy Council in the appeal by the Attorney-General of the
Commonwealth of Australia and members of a Royal Commission on the
sugar industry from a decision of the Australian High Court. Lord
Haldane dealt at length with the Constitution of Australia, which he said
was based on the principle established by the United States, and held
that the Royal Commissions Acts were ultra vires and void so far as they
purported to enable a Royal Commission to compel answers or to order
the production of documents. The Lord Chancellor, in now delivering
their Lordships' judgment, said : — " The question raised is one of much
importance. It turns on the true interpretation of the Constitution of the
Commonwealth of Australia. It is only in exceptional cases that a question
of this nature is submitted to the King in Council. Section 74 of the
Constitution Act of 1900 provides that no appeal shall be permitted from
a decision of the High Court of Australia upon any question, however
arising, as to the limits inter se of the constitutional powers of the Com-
monwealth and any State or States, or as to the limits inter se of the
constitutional powers of any two or more States, unless the High Court
shall certify that the question is one which ought to be determined by the
Sovereign in Council. In the present case the High Court has taken the
exceptional course of so certifying. The reason is that the four Judges
of that Court who heard the case were equally divided." — The Times,
December 13, 1913.

68 IMPERIAL DEFENCE AND TRADE.

most responsible both for administration and for legislation in each
State. At present, its work is tentative ; but the possible scope of
its activities is immense. It is in the nature of a Convention, that
is to say, an Assembly exceptional in character, not formally known
to the Constitution. But it must be remembered that the council
which drew up the Constitution of the United States was a Con-
vention which had no power to enact anything. It simply made
recommendations which were accepted and turned into law by the
legislatures of the several States. Moreover, at any time the members
of the Imperial Conference may have some particular powers con-
ferred upon them by the States which they now informally repre-
sent. Or, by means of the telegraph, the Imperial Conference may
be turned into a Conference of Cabinets concerning any great con-
stitutional problem.

At the last two Imperial Conferences suggestions were made
towards giving greater continuity to this institution by estab-
lishing in London a permanent administrative machinery which
should be in the nature of a Government office and which might
arrange subsidiary or partial Conferences during the intervals
between the quadrennial Conferences. Something has been done
in this direction through the establishment in London of a
permanent Secretariat to the Imperial Conference.

(5) The Committee of Imperial Defence. — This was at first a purely
British body : but by the inclusion of " Colonial " members it is
assuming a more comprehensive and representative character. States-
men from the Dominions have frequently taken part in its sittings,
and it is now proposed that the Dominions shall appoint per-
manent representatives upon it.* Although this Committee
possesses only the power of consulting and advising, yet it is
an officially constituted Council, forming as it were a part of the
Executive, in touch with the Foreign Office, the Colonial Office,
the War Office, and the Admiralty. The elasticity and practical
expansive scope of such consulting Committees appear in the
fact that some members of the Imperial Conference of 1911

* Wellington, June 10, 1913. — Colonel Allen, Minister of Defence, enter-
tained on his return from England, said that the British Premier had
invited New Zealand to appoint a permanent representative on the Com-
mittee of Imperial Defence. A full acceptance would be inconvenient,
but they would accept as far as possible. — The Times.

IMPERIAL DEFENCE AND TRADE. 69

attended as individuals some sessions of the Committee of Imperial
Defence. It is known that these secret sessions passed fully
in review the whole subject of Imperial Defence and of British
Foreign Policy throughout the world. The understanding so
reached marks an epoch in our inter-State relations. This is
proved by the fact that the Treaty of Alliance with Japan,
renewed soon afterwards with some modifications, expresses in
effect a concurrence of the responsible Ministers of all the British
self-governing States. Formally that Treaty was the work of
the British Foreign Office ; but in fact the Dominions and the
Mother-country spoke to the world for the first time with
one voice.

(6) The Imperial General Staff.— In 1890 Dilke wrote "The
very existence of a general staff would constitute a form of
Imperial military federation ". And he goes on to sketch the
work which should be done by a General Staff much on the
lines which are being actually followed to-day, as the following
paragraph shows : —

" The Imperial Conference of 1911, in its military effect, did
something to carry out the principles of co-operation already agreed
to at previous Conferences. The co-operation of Home and Dominion
military forces in the general defence of the Empire was once more
affirmed as a working proposition, and it was agreed that the local
sections of the Imperial General Staff should make arrangements
for such co-operation under the orders of their respective Govern-
ments and in communication with the Central Section at the War
Office on which the Dominions were to be represented. This latter
part of the plan was carried into effect on April i of this year,
when a Dominions Section of the General Staff was formed at the
War Office. The Section consists at present of one officer from
Canada and one from Australia, and it will be increased from time
to time by the appointment of representatives from other Dominions.
The duties of the officers in this Section will be to study our system
of education, training, and staff duties ; to learn the latest ideas
on the subject of strategy and tactics ; to supply the Chief of the
Imperial General Staff with information on local matters in their
respective Dominions, and to correspond on all such matters with
their local chiefs. . . .

" The subjects which the local sections of the Imperial General
Staff should deal with have been agreed upon, while the relationship
and best means of keeping touch between the Chief of the Imperial

70 IMPERIAL DEFENCE AND TRADE.

General Staff and local sections have been settled in principle.
Effect has been given to the proposals of 1907 and 1909 respecting
the education of officers. In this important matter the Oversea
Dominions have adopted our examinations in every detail, and the
Conference of 1911 was able to record an opinion that the action
taken had resulted in a marked improvement in military education.
Courses of instruction have been arranged for Dominion officers in
the United Kingdom and in India, and places will be reserved for
them at the Staff Colleges of Camberley and Quetta. There are
already six officers from the Dominions at Camberley, and the
numbers will be increased as accommodation becomes available.
Finally, the terms upon which the services of the Inspector-General
of Oversea Forces can be invited by Dominion Governments, have
been agreed upon." — The Times, May 24, 1912.

(7) Conference on Imperial Defence, 1909. — In 1909 a Conference
on Imperial Defence met in London, attended by delegates from
all the Dominions. Technically, this was a " Subsidiary Con-
ference ", assembled under a resolution of the Imperial Conference
of 1907. In effect it was a Convention, specially assembled for
consultation between the British Government and the Govern-
ments of the Dominions on the subject of Defence. The sessions
were private : but the Prime Minister announced in the House
of Commons the decisions which had been reached, subject to
the approval of the various Parliaments. " In military affairs,
the forces of the Crown, wherever they were, were to be so
organised that, while preserving the complete autonomy of each
Dominion, their forces could be rapidly combined into one
homogeneous Imperial army." This rather vague summary was
followed by a definite statement as to naval policy. But since
this naval scheme has been much modified in practice owing to
changed conditions, its details may be omitted here.

This passage of history illustrates the great elasticity, the
immense unifying^ value and the possible scope of such occasional
Conventions and consultations. In the very wide sphere of
executive action, such consultations may be decisive ; and it
should be noted that, subject to the check of the money- voting
authority, the principal functions of Government are executive,
including the entire disposition of armed forces.

(8) Citizenship. — It may seem almost superfluous to"5 note
the common citizenship of all white " British Subjects ". An

IMPERIAL DEFENCE AND TRADE. 71

Australian, on landing in Canada or in the United Kingdom,
finds himself at once by natural right in possession of the same
status and privileges as the " native-born " citizen. But it is
necessary to mention this point for two reasons. In the first
place, there are certain difficulties and restrictions attending the
exercise of this common citizenship : secondly, this legal participa-
tion of civil rights provides another means of concerted and
equal action on the part of all the States. For an agreement
has been practically concluded between Great Britain and all
the Dominions, that henceforth each Dominion shall be com-
petent to grant letters of naturalisation which shall be valid
throughout the Empire.

(9) Diplomatists and Consuls. — There is one Diplomatic Service
and one Consular Service for the whole Empire. These public
services are supported by Great Britain, and all appointments
are made by Great Britain. But the main point is that, in
whatever part of the world an Australian or a Canadian may
find himself, the British Minister is his national representative,
and the British Consul is his legal and commercial adviser.

(10) Defence and Foreign Relations. — As the present thesis
shows, this part of Government is passing through a process of
discussion, of development, of experiment. With regard to
international affairs, the technical position still is this, that the
sole channel of national expression is the British Foreign Office.
But in some cases separate treaties are now made on behalf
of the several States as their circumstances differ ; and in
response to the request of Canada at the Imperial Conference of
1911, Great Britain has denounced some of the old treaties which
limited the fiscal freedom of the Dominions. _ One instance is
noted below.* kj

No part of the Empire can remain neutral in a war in which
other parts are concerned ; since obviously any part of the

* May 9, 1913. — Eighteen months ago the treaty of friendship and
commerce between Great Britain and the Argentine Republic, which was
signed as far back as February 2, 1825, was repudiated by the former
on the ground that the autonomy granted to some of the British colonies
did not permit it to remain in force, and that the provisions were out
of date. Another treaty, affecting Great Britain alone, was presented by
the British Minister. — South American Journal.

72 IMPERIAL DEFENCE AND TRADE.

Empire would be liable to attack by the enemy. But each
Dominion is now working out its scheme of defence. The
co-ordination of these schemes is the military side of the problem,
which is discussed on its political side in this thesis.

ECONOMIC BONDS.

These are the chief constitutional bonds between the self-
governing States. But there are certain other bonds of an
economic kind, which are official and executive in character :
they may therefore fairly be reckoned among the technical
and tangible links of Empire : —

(a) Imperial Penny Postage — an economic measure deliberately
designed to facilitate communication between the British system
of States. The fact that in some instances it has been also
extended to other countries does not affect the argument, but
perhaps rather suggests the ulterior scope of such measures.
It is obvious that this postal agreement is in itself a notable
measure of commercial co-operation in two ways. In the first
place, such things as are sent by post — including newspapers
— constitute in themselves a considerable branch of commerce.
Secondly, every additional facility given to communication
means facility and encouragement to trade of every kind. It
is noticeable that, whereas printed matter from the United
States used to enter Canada at a cheaper rate than from Great
Britain, the postal rates from Great Britain have now been
reduced below that cheaper rate. This lowering of rates is in
itself commercial co-operation of an intimate kind ; so important
is the trade in ideas disseminated by publication.*

(b) Subsidies granted to mail-steamers sailing between Great
Britain and the Dominions are much higher than those paid to
foreign-bound mail ships.

* The fact that this arrangement is likely to be discontinued does not
cancel its significance. Such matters must be constantly liable to re-
adjustment ; and in any case this is only one instance of economic co-
operation out of many.

IMPERIAL DEFENCE AND TRADE. 73

(c) Inter-State submarine cables, laid with the help of Govern-
ments. This form of co-operation is best illustrated by the
following extract : —

" In August, 1898, after a local conference in Sydney, the Govern-
ments of New South Wales, Victoria, Queensland, and New Zealand
declared their readiness to pay four-ninths of the cost of the Pacific
enterprise if the British and Canadian Governments would accept
responsibility for the remaining five- ninths. This, in April, 1899,
Mr. Chamberlain expressed himself unable to do, since the Pacific
Cable was ' a matter of much greater importance to Australasia
and Canada than to the United Kingdom ', which supported it only
on broad Imperial grounds. He declared himself ready, however, to
offer an annual subsidy not exceeding £20,000 towards any deficiency
in the Pacific receipts. To the Colonial Governments this decision
was a serious blow, mainly because they would be unable to raise
the requisite capital on equally advantageous terms without the
participation of the British Government. Mr. Chamberlain therefore
consented to reconsider it, and in July was able to announce that
his Government would share the remaining five-ninths of the cost
with Canada, and that the enterprise would immediately be handed
over to a Board of Control to consist of three members for Great
Britain, two for Canada, and three for the Australasian Colonies.
This was the form in which the enterprise was eventually realized.
. . . The Pacific Cable was laid two years later by the Governments
of Great Britain, Canada, Australia, and New Zealand in partnership;
the stretches running from Vancouver to Fanning Island, from
Fanning Island to Fiji, from Fiji to Norfolk Island, from Norfolk
Island to New Zealand, and from New Zealand to Australia. At a
later date another length was laid from Norfolk Island to Australia
direct ". — The Times, May 24, 1912.

The commercial side of this co-operation between the States is
obvious. The British Postmaster-General, returning now from
Canada (October, 1913), speaks of Canadian " public feeling in favour
of the construction of a State-owned Atlantic cable as a work of the
first Imperial importance". — (The Times.) Other cables, which
link parts of the Empire, have received large public subsidies,
although they are owned by private companies.

(d) Public Debts. — When one of the Dominions floats a loan on
the London market, that act in itself amounts to the deliberate
creation of economic and commercial co-operation. Doubtless it is
chiefly owing to motives of necessity, or at least of expediency, that

74 IMPERIAL DEFENCE AND TRADE.

the money is usually sought in England rather than elsewhere. But
the motive does not affect the result. In 1890, Dilke wrote : " Colo-
nial debts do something to create the idea of imperial unity, and to
knit the Empire together". The lending of money, with the pay-
ment of interest, is in itself a very important branch of trade in the
larger sense of the word " trade" ; but loans and payment of interest
also mean trade in the narrower sense of the word, since the interest
on loans is actually paid either wholly or in great part by the export
of goods from the debtor country to the creditor country. This
truth is illustrated by the whole system of Bills of Exchange and by
the variations in the rate of exchange of currency between two
countries.

(e) Trustee Stocks. Still more remarkable is the action of the
British Government in adding "Colonial" Government Securities
to the list of Stocks authorised for investment by trustees. This is
a deliberate and definite measure of inter-State commercial co-opera-
tion— a measure undertaken in the interests of both participators
in the arrangement ; on the one side the interests of the British
investor, on the other side the interests of the " Colonial " com-
munities and taxpayers. This measure is the more noticeable, inas-
much as it imposes a kind of tax upon the people of the United King-
dom and provides a kind of protection for " Colonial " credit. For
this enlargement of the list of Trustee Stocks has made it more diffi-
cult for the British Government to borrow, has depressed the price
of Consols, and has tended to raise the rate of interest on new public
borrowings in Great Britain. An instance may be given : there is
no doubt that the advantage thus given to Colonial securities has
increased the difficulty of financing Irish Land Purchase, and has
thus caused loss both to the British taxpayer and to the Irish vendor
of land, who accepts part payment of the purchase money in depre-
ciated Government Stock. It is impossible to estimate how far
these losses are counterbalanced, from the purely British point of
view, by the enlargement of investments permitted to trustees. But
the position, from the wider Imperial point of view, is this,
that the United Kingdom has sacrificed something of its own credit
in order to raise the credit of the Dominions and strengthen the
economic bond between Great Britain and those States.

(/) Guaranteed Loans. — The British Government has sometimes
guaranteed Dominion loans, thus lending British credit to the Domi-

IMPERIAL DEFENCE AND TRADE. 75

nions. This was done for Canada in 1867 and 1873, and for South
Africa in 1909. It may be noted that the object of the Canadian
guaranteed loan of 1873 was concerned with trade and defence,
besides its immediate object of aiding Canadian union. For it was
raised to facilitate the construction of the Canadian Pacific Railway,
which is an important link in the strategical and commercial com-
munications of the Empire.

In fact, it might almost be argued that these economic measures
in themselves supply an answer, in part at least, to the whole theme.
The question concerns possible future co-operation between our
self-governing States for purposes of trade. It may be answered that
the self-governing States have already effected, for certain purposes
of trade, co-operation of a close and permanent nature.

(g) Consular Service. — It may here be noted again that one con-
sular body serves the whole Empire. Since the business of these
consuls is largely commercial, here is to be found a certain degree
of co-operation for trade purposes. It is true that all consuls are
now appointed and paid by Great Britain ; but the funds are partly
provided by consular fees, payable by all citizens of the British States
who have business to transact with any British consul.

(h) Emigration provides a kind of loose co-operation between the
Governments of Great Britain and of the Dominions in the
matter of advising, guiding, and assisting emigrants. The stream
of British emigration which increasingly sets towards the Dominions
rather than towards foreign countries is a distinct influence for union. *

* Ten years ago the majority of owe emigrants still went to the United
States. Canada was then only beginning to come into the field as a
serious rival. In 1900 the United States took six times as many as
Canada ; in 1905 they drew level, and in the following year Canada
forged ahead. She has since increased her lead so rapidly that last year
she took three times as many emigrants from this country as the United
States. The number had risen from 7,800 in 1900 to 62,000 in 1905
and to 135,000 in 1911 ; last year the actual number fell slightly by about
i.ooo, but the United States record, which had been 100,000 in 1907,
dropped still more, down to 46,000. Nor has the new movement been
confined to Canada. In the last few years Australasia has advanced still
more rapidly. In 1905 the number of emigrants to Australia and New
Zealand was about 7,000 ; last year it had risen to nearly 80,000, or just
half as many again as to the United States. Thus Canada and Australasia
between them absorbed last year more than 213,000 British emigrants,
and our own Dominions took nearly five times as many as the United
States. The other great Dominion — namely, South Africa — has shared
in the movement, though to a much smaller extent.— -The Times,

F

76 IMPERIAL DEFENCE AND TRADE.

Since this emigration is fostered by State action, and since
it is, in part at least, an economic movement which encourages
inter-State commerce, it may be mentioned here, although no insis-
tence is laid on its classification. Several oversea Governments give
" assisted passages " and other aid to selected emigrants. The
British Government ostensibly only assists by advice and informa-
tion given through the Emigrants' Information Office ; but emi-
gration to the Dominions has also been organised and assisted by
Unemployment Committees, which are official bodies disposing of
public funds with the sanction of the Government.

There is no doubt that trade follows the lines of emigration. The
principal reason is the demand of emigrants for the products to which
they have been accustomed in their native country. But the
encouragement given to shipping by emigration also facilitates trade
along those routes. Thus emigration from Great Britain to the
United States fostered trade between those countries. The diver-
sion of that emigration towards the Dominions — a diversion partly
due to State action — fosters trade with the Dominions.*

* The influence of emigration on trade is illustrated by the following
extract from the report of the British Consul at Iquique for 1912. Its
evidence is all the more valuable for being completely unconnected with
the present topic. Obviously the statement that " Trade follows Emigra-
tion " is quite distinct from the much controverted assertion that "Trade
follows the Flag". "It will thus be seen that the position of the United
Kingdom so far as the trade of this port is concerned is satisfactory, but
it would be surprising if it were otherwise in view of the fact that the
trade of the province is dependent upon the nitrate industry, and a large
proportion of the capital invested in this industry is British, it being
estimated at ^10,700,000 out of a total capital placed approximately
at ^27,500,000. The result is that British firms in Iquique maintaining
British staffs represent the larger proportion of the nitrate companies,
and the requirements of these companies' oficinas are ordered through their
representatives in Iquique, who place them in the United Kingdom unless
there is a distinct advantage in placing them elsewhere. A large volume
of foreign trade is placed annually in the hands of British manufacturers
at home, thanks to the enterprise of successful British firms established
in foreign countries. British subjects abroad like to use the articles with
which they are familiar both in their houses and in their business, and
if they cannot obtain them where they reside they will send to the United
Kingdom for them. If they be successful men of business, it stands to
reason that not only their methods will be imitated by their neighbours,
but the class of materials they use in their business will be sought after,
and in this way the importation of British-made goods is increased in
that neighbourhood."

IMPERIAL DEFENCE AND TRADE. 77

GEOGRAPHICAL AFFINITIES.

Since much has been said about the geographical obstacles to
union, it is well to point out some geographical conditions which
favour union. It has been said that " The true theatre of History
is the Temperate Zone ". It may now perhaps be said that " The
true theatre of History lies in the Temperate Zones ". Of the three
great land masses which stretch into the South Temperate Zone
two are British. The territories of British Dominions lie mostly
within the Temperate Zones ; the chief exceptions are the northern
tropical parts of Australia and of South Africa.* But in Australia
the weight of population lies in the south, and the people are deter-
mined to fight against tropical tendencies and to make their whole
Continent a home for Europeans, and for none but Europeans. This
can only be done by avoiding the local influences which prevail in
the Western Pacific and by cultivating the character which prevails
in Northern Europe and in the northern part of North America.
In South Africa the presence of an immense black population empha-
sizes the desire of the whites to be entirely North-European in charac-
ter. And this predilection shows itself in the restrictions placed
upon Asiatic settlement. Both in Australia and in South Africa
this restrictive policy is partly due to apprehension of damaging
competition in labour and trade. But a genuine and larger
motive is a desire for the racial purity and vigour of the people.
This is a case where sentiment, present expediency, and policy
aiming at future welfare, overlap and merge into one another.

Thus there is a kind of geographical telepathy crossing the
Equator and bringing the Dominions of the Southern Hemisphere
into touch with Great Britain and Canada. This tendency is
now in some degree taking form in the defensive and commercial
co-operation, which is being effected across the Pacific between
Australia and Canada.

* The fact that Northern Canada is Arctic does not affect the position,
since that fact involves no racial problem.

78

CHAPTER IX.
TENDENCIES IN GREATER BRITAIN.

" The change ... is a change not of particular details
but of pervading spirit . . . What we call the spirit of politics
is more surely changed by a change of generation in the men
than by any other change whatever." — Bagehot.

The examination of institutions in the last chapter in some
degree anticipates the subject of the present chapter, since
it is impossible to treat institutions without considering their
mode of working and present tendency. But before attempting
any conclusion, these tendencies must be examined with special
reference to the problem of combined action in regard to foreign
policy and trade.

Since Canadian Federation was completed, there have been
in the British Empire two well-marked tendencies — apparently
contradictory but in fact complementary to one another —
namely the movement towards greater independence of the
individual States and the movement towards closer union between
the States. The movement towards independence means gradual
emancipation from British control, the Dominions assuming
more and more the character of sovereign States. The move-
ment towards closer union means the voluntary action of the
Dominions, acting in this matter as sovereign States and seeking
to strengthen their position by supporting one another. The
second movement follows from the first and is illustrated by
the history of union within the several Dominions. For the
separation of Ontario and Quebec preceded the union of all
Canada : before the Australian States could unite, New South
Wales had to surrender her claims to primacy among them :
in order to effect South African Union, Cape Colony was obliged

IMPERIAL DEFENCE AND TRADE. 79

to make similar concessions. In the same way, Great Britain
has to loose the Dominions from leading-strings before she
can grasp their hands as equals.

The movement towards independence is best illustrated
by comparing the Federation of Canada in 1867 with the
Federation of Australia in 1901. The latter movement is both
more democratic and more independent in four respects : (i)
The mode in which the Constitution was drawn up ; (2) The
provisions for its amendment ; (3) The choice of Senators ;
(4) Appeals to the Privy Council.* On the other hand the
complementary tendency towards union by other means appears
in the preceding chapter. Both tendencies are illustrated in
Dilke's epoch-making books. In 1866-7 Dilke saw in the move-
ment towards Australian Federation a probable movement
towards independence and found no indication of any political
understanding between Australia and New Zealand, but rather
an evident antipathy. Twenty-three years later, in 1890, the
same writer depicts a different state of opinion. Yet even at
that date he writes, " Australian opinion is more apathetic
than is even Canadian, with regard to what in England is called
Imperial Federation ", and he notes that educated young Austra-
lians seemed on the whole to favour separation, f

The views expressed at the Imperial Conference of 1911
indicate how far colonial opinion has moved in the direction of
union since Dilke wrote. It is true that in tracing the several
unifying movements in Canada, Australia, and South Africa we
have been watching the birth or development of nations. Yet
this growth of local nationality has been accompanied by a
growing desire in the Dominions for closer co-operation both
in defence and in trade, and for a more efficient machinery of
co-operation. This movement illustrates Dilke's remark that
" The separation of the Colonies would bring one great advantage,
namely the possibility of the virtual federation of the Empire".
The Dominions now seem to be conscious that they have
achieved such a degree of separation as may render possible
virtual confederation. This double consciousness, first of national

* See Prof. Egerton, Federations and Unions.
| Problems of Greater Britain, Vol. II, p. 483.

8o IMPERIAL DEFENCE AND TRADE.

dignity, then of the need for the machinery of closer co-operation,
has been plainly stated by Mr. Borden. In a speech at Toronto
he said : —

" Let me make one point clear. Canada, leading in that respect,
and the other Dominions of the Empire established three-quarters
of a century ago the principle of self-government, which has since
developed into the complete control of our own affairs that to-day
we enjoy. In one respect only we have failed to attain the full
status of nationhood. This was clearly pointed out by Mr. Edward
Blake in 1874, when he said that our Government should not
present the anomaly it now presents of a Government, the freest
and perhaps the most democratic in the world with respect to
domestic and local matters (in which we rule ourselves as fully
as any nation in the world), while in foreign affairs — our relations
with other countries, whether peaceful, commercial and financial, or
otherwise — we may have no more voice than the people of Japan.
.... Those whom those questions concern must always reckon
with the inborn feeling in the Canadian breast that a British subject
living in this Dominion must ultimately have as potent a voice in
the government and the guidance of this world-wide Empire as the
British subject living in the United Kingdom. Whether our home
is in the British Islands or in Canada, we must be equals before
the King. The full privileges, as well as the full duties and respon-
sibilities of citizenship are the right of the Canadian people." —
The Times, Sept. 16, 1913.

It is clear that, in colonial opinion, co-operation for defence
can only be effectively carried out by means of co-operation
for the guidance of foreign policy.* This means some kind of
central Executive existing for the purpose of one most important
branch of Government, an Executive authorised by all the self-
governing States. Dr. T. J. Lawrence lately remarked, " A
Power can no more be neutral in part and belligerent in part
than a man can be married in part or single in part", and he
proceeds to urge the need of a central body to decide " the
momentous issues of war, peace and neutrality." But the deci-
sion of these momentous issues obviously implies a constant
supervision and guidance of the whole course of foreign policy,
upon which these issues depend. Sir Joseph Ward clearly

* The Imperial Conference of 1911 actually achieved, in some degree,
a kind of temporary co-operation in the guidance of foreign policy.

IMPERIAL DEFENCE AND TRADE. Si

grasped this truth when he advocated an " Imperial Parliament
. . . limited to foreign policies, defence, and peace or war ".
Whether a " Parliament " be created or some smaller Executive
body, in any case foreign policy cannot be excluded from its
supervision.

The British mode of constitution-making is to use and develop
existing institutions. Our Education authority springs from an
Order in Council appointing in 1834 a Privy Council Committee
for Education ; and the Cabinet itself has a still more informal
origin. Thus, it may be noted that, through the Imperial
Committee of Defence, the self-governing States are already
co-operating in an unobtrusive and consultative fashion for
purposes of defence, while the periodical Conference of Premiers
provides a means of checking, guiding, or extending all such action.
It has been officially stated by the Prime Minister in Parliament
that the Defence Committee exists merely to advise the Govern-
ment on tactical and strategical questions. This statement is tech-
nically accurate, but it hardly describes the essential realities of
the case. For the Imperial Defence Committee is an assembly of
statesmen, including some military experts ; and when its meetings
are attended, as in 1911, by the Premiers of all the self-governing
States of the Empire, it is impossible that its deliberations should be
confined to tactics and strategy in the purely military sense. It
cannot help considering large political strategy besides. When
questions shall arise in the future resembling such former problems
as the acquisition of the Cameroons, the purchase of Delagoa Bay,
or the delimitation of the British Guiana frontier, then such questions
cannot fail to be discussed by the Imperial Defence Committee,
since the dangers to be incurred by any course of action in such cases
are problems of defence. But they are also questions of foreign
policy. Whether such matters are to be treated by a strengthened
and developed Defence Committee or by some more comprehensive
central authority, is immaterial to the main argument, although it
is an important practical question of administrative machinery.
It should be noted that the Cabinet itself acquired its powers by
gradual assumption on its own part and by concession or acquiescence
on the part of the Crown, the Parliament, and the people.

The question remains whether it is possible to exclude questions
of commerce from the discussion or supervision of foreign policy.

82 IMPERIAL DEFENCE AND TRADE.

It has been already argued that such exclusion is illogical and con-
tradictory. The question of Delagoa Bay — a question of foreign
policy — was primarily a commercial question. The construction of
the Uganda Railway by the British Government meant aid to com-
merce through foreign policy. The occupation of Aden, Singapore,
and Hong-Kong is a matter of defence and of foreign policy undertaken
for the furtherance and protection of trade ; and this matter closely
concerns Australia as well as Great Britain.

The official expression on the part of Colonial statesmen of a
desire for commercial co-operation is clearly relevant, for it forms
the foundation of the present thesis. At all the six " Colonial "
or " Imperial " Conferences which have been held since 1887, Colonial
opinion has favoured preferential treatment between Great Britain
and the Colonies. At the Conference of 1902 a Resolution was unani-
mously passed in favour of such an arrangement, and in 1907
this Resolution was re-affirmed, Great Britain dissenting by
means of a reservation.* In the same way a Resolution in favour
of Navigation Laws was unanimously adopted in 1902, and was
re-affirmed, Great Britain dissenting, in 1907. The Conference of
1911 recommended a Royal Commission to investigate resources,
production, manufacture, trade, and the effect of existing legis-
lation upon trade. This " Dominions Royal Commission " is now
(December, 1913) engaged in preparing its Report. It may be
added that the Chambers of Commerce of the Empire, in their last
five Congresses, held since 1900, have passed resolutions in favour of a
Preferential Customs arrangement. Various other forms of com-
mercial co-operation have been discussed and recommended both in
the Imperial Conferences and in the Congresses of Chambers of Com-
merce.

The Conference of 1911 illustrates the impossibility of excluding
commercial questions from the guidance of foreign policy. " Some
difference of opinion was manifested whether foreign relations would
include commerce, "f If this difference of opinion occurred in a
merely tentative and suggestive discussion, it is obvious that com-

* The fact that one particular form of commercial co-operation has been
much discussed is not an adequate reason for giving it special prominence
in a scientific enquiry. Accordingly detailed treatment of this point is reserved
for the Appendix.

f United Empire, March, 1913.

IMPERIAL DEFENCE AND TRADE. 83

mercial discussion cannot be permanently excluded from the dis-
cussion of foreign policy.

It may be argued that the British Executive which now directs
our foreign relations and our defensive arrangements does not control
or supervise commerce. This is not the case : for the British Govern-
ment does much to advise, to guide, and to control commerce not
only in the dependencies of the Crown, but also in the United
Kingdom. *

CONCLUSION.

Thus the argument seems to indicate that the discussion of defence
must involve the discussion of foreign policy, and that the discussion
of foreign policy must involve the discussion of trade.

It follows, then, that the supervision of defence must include
some supervision of foreign policy, and that this must involve some
supervision over trade. It may be that this supervision will only
lead to occasional interference with trade or occasional direction of
trade. But, even with that limitation, this supervision of trade by
a central authority means co-operation of the self-governing States
for purposes of trade, in whatever degree and in whatever direction
that supervision be exercised. Moreover, it is impossible accurately
to define and limit the degree and the direction of such discussion
and such supervision. Under British methods the measure of acti-
vities assumed by any official authority is usually public approval
or public acquiescence. But the degree and the direction of these
activities are matters of detail. The broad conclusion is that divorce
between foreign relations and trade is impracticable.

Thus it may be here distinctly stated that the historical con-
clusion given at the end of Chapter VI is confirmed by the argument
drawn from present tendencies. That argument indicates that com-
mercial co-operation is an indispensable condition of defensive
co-operation.

* e.g., In State regulation of railways, in State aid to light railways and
harbours in Ireland, in the recent " Development grant ".

84

CHAPTER X.
RECENT CO-OPERATION FOR TRADE.

It has already been suggested, on page 75, that the work actually
done in the way of commercial co-operation might almost seem in
itself to provide an answer to the problem. But, subsequently to the
announcement of this theme in March, 1913, further advance has
been made in co-operation for purposes of trade between the self-
governing States. Thus it might almost be suggested now that the
question has in the meantime actually found its own answer, an
answer which might be formulated thus : —

" Since the announcement of this theme, the self-governing States
have continued in a more definite manner their former course of
gradually and unobtrusively building up an effective co-operation
for purposes of trade in two ways : — (i) Reciprocity treaties ; (2)
Subsidies in aid of communication. Thus time and the progress of
events have already answered the question."

But the present writer does not wish to urge this view, because
it is difficult to see in true perspective events which are actually in
progress. Moreover, the expediency and the probable effects of
these measures are much contested. Thus, these points have been
kept for this supplementary chapter, added by way of illustration,
since critics might urge " These measures have not been proved
effective, and they will probably be abandoned ". Obviously, how-
ever, these measures, whether wise or unwise, whether likely to endure
or not, are actually measures of co-operation for purposes of trade,
and thus they demand treatment. Some former steps have been
already indicated in Chapter VIII namely, Postage, Mail Subsidies,
Cables, Public Debts, Trustee Stocks, Guaranteed Loans. Thus,
before the present year (1913), a succession of practical measures
had been effected in the way of co-operation for purposes of trade.
Other measures have since been added. Last July it was announced

IMPERIAL DEFENCE AND TRADE. 85

that Canada had agreed upon a Reciprocity Treaty with Australia.*
In September it was announced that Canada was subsidising a steam-
ship line to the British West Indies, and was co-operating with Great
Britain to reduce cable rates to those islands, f Thus Canada simul-
taneously co-operates with Australia to facilitate trade with British
lands in the Pacific, and with Great Britain to facilitate trade with
British lands in the Atlantic. This is a large step towards general
co-operation for trade purposes.

It is significant that Canada is concerned in all these three recent
agreements ; for Canada during a century and a-half has been
making history for the other British States.

Thus the self-governing States have during the present year
(1913) effected some partial co-operation for purposes of trade, and
are attempting to make that co-operation more intimate and more
effective. Hitherto this commercial co-operation has been effected

* Mr. Tudor, the Australian Minister of Trade and Customs, and Mr.
Foster, the Canadian Minister of Trade and Commerce, who are in Sydney as
members of the Empire Trade Commission, arrived at a general agreement
to-day regarding reciprocity between the Commonwealth and the Dominion.
The schedule will be discussed after Mr. Foster's visit to Tasmania. Both
Ministers express their keen gratification with regard to the agreement.
— Daily Mail, 1913.

f Ottawa, September 27, 1913. — Mr. Foster, Minister of Trade and Com-
merce, has announced that the Government has completed a contract
with the Royal Mail Steam Packet Company for a service to the West
Indies. Messrs. Pickford and Black, with whom arrangements were made
last year, were unable to secure the necessary steamships and had to drop
the contract. The agreement with the Royal Mail Company is for a five
years' service between St. John, Halifax, and the various Colonies included
in the trade agreement. Four vessels are to be included in the service and
are to be modern in every respect and well-equipped, both for passengers
and freight. The vessels are to be capable of carrying 5,000 tons of cargo
and of maintaining an average speed of between u and 12 knots. The
first steamer will leave Halifax on November i and the others will follow
in regular order. An arrangement is made by means of which perishable
cargo will be taken from St. John to Halifax without increasing the cost.
The amount of the subsidy is not announced. Canada at present pays
the entire subsidy.

It is also announced that arrangements have been concluded for the
reduction of the cable rates between Canada and the British West Indies
by a half. To enable this to be done the British Government is to make
an annual contribution of ^8,000 and Canada is to contribute a similar
amount. Both arrangements as to the steamship and cable services are
in accordance with the Canadian Government's trade agreement with the
British West Indies.

86 IMPERIAL DEFENCE AND TRADE.

by a series of separate agreements : the same thing is mainly tru
of such defensive co-operation as has been already realised.

It may be urged that the Defence Conference of 1909, in the scheme
for a Pacific fleet, was calculated to effect defensive co-operation
without commercial co-operation, and that there would be no reason
to doubt the permanence of that defensive co-operation. The answer
is that this arrangement is already being modified in the direction
of individual action on the part both of Britain and of the Domi-
nions. Moreover, communications are said to be now passing
between Australia and Canada with a view to joint action in
the Pacific, going far beyond the agreement of 1909. It is
significant that, simultaneously with those communications, Canada
and Australia are negotiating a Reciprocity Treaty.

87

" Physical strength is one of the first conditions of the
happiness and even of the existence of nations."

— DC Tocqueville.

" All these Empires were beset by certain dangers which
Greater Britain alone has hitherto escaped . . . and the great
question is whether she can modify her defective constitution in
such a way as to escape them for the future." _~ .

"It is in the Cabinet alone that questions of foreign policy
are settled. We never consult Parliament till after they are

settled."

— Palmerston.

APPENDIX I.

ANALYSIS OF POSSIBLE METHODS OF

CO-OPERATION.

COMMERCIAL

1. Commercial co-operation might merely take the form of
continuing and amplifying that which is already being done in the
way of aiding communications through shipping lines, postal
facilities, acquisition or laying of cables, cheapening of telegraphs,
and similar activities. Such work does not necessarily demand a
central authority, although it could be most effectively carried on
by such an authority, either acting directly or serving merely as
an advisory Board for the several Governments.

2. Fortified ports having any relation to commercial lines of
communication might be jointly garrisoned by the States concerned,
and the inter-State seas or oceans might be guarded by those States.
Thus Australia and Britain might jointly garrison Singapore, Colombo,
and Aden ; Canada and Britain might act together in Bermuda ;
Australia, New Zealand, and Canada in the Pacific. Such co-opera-
tion for defence of trade does not actually amount to co-operation
for purposes of trade ; but it is a step in that direction, bringing
the States into close connection for purposes relating to trade.

The naval part of this joint action is being actually carried
out in the Pacific in some degree. Furthermore, communications
are passing between Canada and Australia with a view to some kind
of joint control in the Pacific ; and it is noticeable that these two
Dominions are negotiating a Reciprocity Treaty at the same time.

Such joint action in defence of trade ports and trade routes
may be also a step in the direction of joint administration of depen-
dencies, which would be both an economic and a political bond
between the States.

3. The States, by sharing between them the cost of the consular
service, would be moving towards commercial co-operation, since

go IMPERIAL DEFENCE AND TRADE.

the consular service may be regarded as in great part a world-wide
bureau of commercial information. If the contributions of the States
towards this and possibly other objects were handed over to the
central authority, this would mean the creation of an Imperial
Exchequer. The diplomatic service might be similarly supplied.
The maintenance of lighthouses outside territorial waters, the cost
of Admiralty surveys and other such matters connected with trade
might similarly be apportioned between the States. Every fresh
addition of financial business to the functions of the central
authority would mean not only a piece of commercial co-operation
but actually a step in the direction of fiscal combination.

4. The creation of a Federal or inter-State debt might be effected
either by pooling (wholly or in part) the existing debts of the States,
or else by combined borrowing for the purpose of defensive
co-operation. It has been pointed out that the raising of loans
and payment of interest is a branch of trade. The existence of
a National inter-Dominion debt, borne in common by all the States,
would be a distinct form of trade. Moreover, as Alexander Hamilton
foresaw in the case of the United States, such a debt would be a
tangible and effective aid to political union. The pooling, whether
partial or complete, of the various State debts would merely mean
an extension of that method of spreading out credit over the Empire,
which has already been occasionally practised. The variations in
credit of the Dominions would render the initial negotiations
delicate ; but this difficulty is not insurmountable. *

On the other hand the raising of a new " Federal " or
Imperial loan would probably be the easiest way to start a
central Exchequer — the loan to be applied to defensive or
other Imperial purposes : and the raising of a new loan might
possibly prepare the way for a pooling of State debts. In
any case, the management of the debt, the receipt of the
interest from the various State Governments and its payment

* The Australian Commonwealth, by taking over the debts of the six
Australian States, is perhaps making experiments and setting an example
to the Empire, as in other matters. " In the Budget statement which was
presented to the Federal Parliament at Melbourne yesterday it was
announced that the Government proposes to introduce a Bill for takii
over the State debts as they mature, but leaving the States free t<
borrow for themselves. The Commonwealth may, however, also bom
on their behalf." — The Times, October 3, 1913.

to

IMPERIAL DEFENCE AND TRADE. 91

the individual creditors would become part of the business
of the central body. Moreover the existence of such a debt might
conceivably render possible the receipt of a small direct tax
by the central authority through the payment of a fixed Imperial
income-tax on the interest, such Imperial income-tax to be
deducted from any local income-tax which might be payable
in the several States.* Any further fiscal arrangement would
necessarily be a matter of cautious and gradual experiment.
But in any case the existence of a central Exchequer, the
constant publication of its financial activities, and the holding
of Imperial Stock by citizens of the several States, would con-
stitute a valuable material support to united action.

5. Navigation Laws must be mentioned as being at all
events a theoretical possibility — that is to say laws designed to
favour the use of national shipping in inter-State trade. The
restriction of inter-State trade to national shipping is out of the
question under present conditions. But some discrimination
in favour of national shipping was actually recommended in
the following resolution passed by the Imperial Conference
of 1902 : —

" That the attention of the Governments of the Colonies
and of the United Kingdom should be called to the present
state of the Navigation Laws in the Empire and in other
countries, and to the advisability of refusing the privileges of
coastwise trade (including trade between the Mother Country
and its Colonies and Possessions, and between one Colony
or Possession and another) to countries in which the corres-
ponding trade is confined to ships of their own nationality ;
and also to the laws affecting shipping, with a view of seeing
whether any other steps should be taken to promote Imperial
trade in British vessels."

This Resolution was re-affirmed, Great Britain dissenting,
in the Conference of 1907.

* Such an income tax would, of course, require the consent of the
several States ; perhaps also it would require the holding of certain
proportions of the Imperial Debt by Corporations, individuals, or public
authorities in the several States. Such an arrangement would be difficult,
but probably not impracticable.

* G

92 IMPERIAL DEFENCE AND TRADE.

6. At various Imperial Conferences the following suggestions
have been made about co-operation in matters of trade : —
Uniformity in the laws of copyright, of patents, of trade marks,
of companies ; uniformity in the law of compensation for
accidents ; an Imperial Postal Order system ; a uniform Com-
mercial Code ; uniformity of Merchant Shipping Laws ; uniformity
of statistics ; an All-Red cable linking all the Dominions.

The Congress of Chambers of Commerce of the Empire,
sitting at Sydney in 1909, passed resolutions in favour of an
Imperial Council for the promotion of inter-Imperial trade,
State-aided immigration to the Colonies, uniformity of weights,
measures and currency, joint conciliation and arbitration boards
for wages disputes.

7. A system of Preferential Tariffs is what is usually meant
by " Co-operation for purposes of trade ". The pioneers of
systematic colonisation and colonial autonomy — Wakefield and
his school — expected permanent Free Trade within the Empire
as a matter of course ; and Lord Durham in 1839 actually
advised that Great Britain should retain control of Canadian
external trade. But it was soon seen that the right of imposing
taxes in any form, whether for revenue or for protection, was
an essential part of autonomy, and that this right would be
nullified by exemption to British imports. In 1872 Disraeli said :—

" Self-government ought to have been accompanied by an
imperial tariff, by securities ... for the enjoyment of un-
appropriated lands and by a military code (denning defensive
arrangements) . . . and by the institution of some representative
council in the metropolis, which would have brought the colonies
into constant and continuous relations with the Home Govern-
ment."

Colonial and Imperial Conferences. — At the first Colonial
Conference, held in London in 1887, Sir Samuel Griffith, as
Delegate for Queensland, submitted the following proposition :—
" That if any member of the Empire thinks fit for any reason
to impose customs charges upon goods imported from abroad, it
should be recognised that goods coming from British possessioi
should be subject to a lighter duty than those coming froi
foreign possessions ".

IMPERIAL DEFENCE AND TRADE. 93

Mr. Hofmeyr, speaking on behalf of Cape Colony, brought
forward the proposal which is mentioned on page 26 : — "To
discuss the feasibility of promoting closer union between the
various parts of the British Empire by means of an Imperial
Tariff, the revenue derived from such tariff to be devoted to
the general defence of the Empire". The proposal was made
with two objects, " to promote the union of the Empire and
at the same time to obtain revenue for purposes of general defence ".

No formal resolution was brought forward : but the pre-
ferential arrangement suggested by these two speakers was
warmly supported by the Delegates from Victoria, South
Australia, Newfoundland, New Zealand, and Natal. Mr. Service,
ex-Premier of Victoria, while avowing himself a Free-trader,
described Mr. Hofmeyr's speech as a " noble speech ", and said,
If we could have a recognition throughout the Empire that
the products of the various dependencies would be treated on
a different footing from the products of foreign countries, I
should be inclined to regard very favourably such a proposal ".
Sir R. Wisdom, Delegate for New South Wales, expressed great
interest in the discussion, but added : — " The delegates of New
South Wales consider that the question is outside the limits of
discussion as laid down in Mr. Stanhope's dispatch, and that as
it seems to them to have an intimate connection with the
wider subject of political federation, they are precluded by their
instructions from dealing with it ".

Mr. Adye Douglas, Agent-General for Tasmania, urged that
agreement between the Australian Colonies as to Tariffs was a
necessary preliminary to any general proposal. He added :—
" I only hope that the effect of this discussion will be to induce
Australasia to act as one ; and then we can very well come to
England, who imposes no duties upon any of our goods, and ask
her to agree to such a scheme as this ".

At the second Colonial Conference, held at Ottawa in 1894,
the following resolution was passed, eight Delegates voting in
favour of it, and three voting against : — " That this Conference
records its belief in the advisability of a customs arrangement
between Great Britain and her colonies, by which trade within
the Empire may be placed on a more favourable footing than
that which is carried on with foreign countries ".

94 IMPERIAL DEFENCE AND TRADE.

In 1897 the first Conference of Colonial Premiers was
held in London. Two resolutions were unanimously passed :
the first urged the denunciation of any treaties hampering the
commercial relations between Great Britain and her Colonies ;
the second was worded thus : " That, in the hope of improving
the trade relations between the Mother Country and the Colonies,
the Premiers present undertake to confer with their colleagues
with the view to seeing whether such a result can be properly
secured by a preference given by the Colonies to the products
of the United Kingdom ".

In accordance with the first Resolution, the Imperial Govern-
ment denounced the commercial treaties then existing with Belgium
and with Germany.

At the Imperial Conference of 1902, the following Resolution
was passed unanimously :

" That this Conference recognises that the principle of pre-
ferential trade between the United Kingdom and His Majesty's
Dominions . . . would stimulate and facilitate mutual commercial
intercourse, and would . . . strengthen the Empire . . .

That, with a view to promoting the increase of trade within
the Empire, it is desirable that those Colonies which have not already
adopted such a policy, should, as far as their circumstances permit,
give substantial preferential treatment to the products and manu-
factures of the United Kingdom . . .

That the Prime Ministers of the Colonies espectfully urge
on His Majesty's Government the expediency of granting in the
United Kingdom preferential treatment to the products and
manufactures of the Colonies ..."

At the Imperial Conference of 1907 it was proposed to re-affirm
the resolution of 1902, with an addition extending the preferential
proposals so as to include trade between the self-governing Colonies,
and with another definite addition : " That it is desirable that the
United Kingdom grant preferential treatment to the products and
manufactures of the Colonies ". The Oversea delegates were generally
in favour of this proposal ; but the British Ministers dissented.
Finally, the Resolution of 1902 was re-affirmed, Great Britain dis-
senting by means of a reservation. In addition a colourless resolu-
tion was unanimously adopted : " That efforts in favour of Briti

IMPERIAL DEFENCE AND TRADE. 95

manufactured goods and British shipping should be supported as
as far as possible ".

At the Imperial Conference of 1911, the Dominion delegates
showed themselves favourable to commercial co-operation, but
no other resolution was passed on the matter. However, the
Conference recommended the appointment of the " Dominions
Royal Commission " mentioned on page 82.

Chambers of Commerce. — The fourth Congress of Chambers of
Commerce of the Empire, which met in London in 1900, passed a
Resolution that " an advantageous commercial bond is one of the
strongest links in national unity ".

The fifth Congress, held at Montreal in 1903, passed a unanimous
Resolution : — " That in the opinion of this Congress the bonds of
the British Empire shall be materially strengthened and a union of
the various parts of His Majesty's Dominions greatly consolidated
by the adoption of a commercial policy based upon the principle
of material benefit, whereby each component part of the Empire
would receive a substantial advantage in trade as the result of its
national relationship, due consideration being given to the
fiscal and industrial needs of the component parts of the
Empire ".

The sixth Congress, held in London in 1906, re-affirmed the
Resolution of 1902, adding " There are in the United Kingdom,
her colonies and dependencies natural resources and industries
which, if developed, would be sufficient to provide the British
Empire with its food supply and all other necessaries and
requirements of life ". . . . The Congress urged preferential
treatment on a reciprocal basis, " believing that thereby the bonds
of union will be strengthened and the British Empire largely freed
from dependence on Foreign countries for food and other supplies " ;
it was added " that this matter is of present practical importance " :
105 Chambers voted for the Resolution, 41 against ; 21 were neutral.

At the seventh Congress, held in Sydney in 1909, the Resolution
of the sixth Congress was re-affirmed on the motion of the
London Chamber of Commerce : 52 chambers voted for the
resolution, 7 against ; 17 were neutral.

The eighth Congress, held in London in 1912, " re-affirmed its
opinion in favour of preferential tariffs " : 87 chambers voted for
the resolution, 9 against ; 33 were neutral.

96 IMPERIAL DEFENCE AND TRADE.

Movement towards Preference in the Dominions. — In 1897
Canada granted to British goods a preference of i2j per cent.,
which was at the same time apparently offered to any country
which might grant compensatory advantages to Canada. But in
1898 this tariff was repealed, and replaced by one granting pre-
ference to countries of the British Empire only. And in 1900 the
preference so granted was increased from one-fourth to one-third.
Moreover, New Zealand, Australia, and South Africa* have followed
the Canadian example. The present working of Preference is sum-
marised in the following paragraph : — " In 1898 Canada granted a
special rate to British products. Since 1907 she has had a compli-
cated preferential tariff granting an average reduction of duties of
about 28 per cent, to the Motherland. In 1903 New Zealand fol-
lowed suit, and now Australia and the Union of South Africa have
similar arrangements. In New Zealand Preference takes the form
of a surtax upon non-British goods. South Africa gives a rebate
to British, Canadian, and Australasian imports. Australia has a
double tariff, favouring British imports. Latterly, moreover, the
Imperial trade relationship has been strengthened on this hemi-
sphere by the Canadian-West Indian agreement, the most impor-
tant part of which provides for Preferential Reciprocity in Cana-
dian flour and West-Indian sugar ". — The Times, 1913.

Thus within the last decade a network of Preferential arrange-
ments has been established, which will shortly be extended by
Reciprocity between Canada and Australia.

It should be added that in the Canadian General Election of
1911 the Canadian people decisively rejected a Reciprocity arrange-
ment which had been negotiated between Canada and the United
States and had been approved by both Houses of Congress at
Washington.

Movement in Great Britain. — In 1902 a small " registration
duty" was imposed on corn and flour imported into Great Britain.
Canada protested against the application of this duty to Canadian
products, and intimated that she was prepared to increase the Pre-
ference already granted to Great Britain in return for exemption
from this tax, but urged that, in any case, Canadian flour and

* It seems doubtful whether South Africa will continue this arrange-
ment. But the action of the three other Dominions is sufficiently remarkable.

IMPERIAL DEFENCE AND TRADE. 97

corn should be freed from duty, whether by preferential exemption
or by remission of the tax. The Secretary for the Colonies, Mr.
Joseph Chamberlain, desired the continuance of the tax on foreign
corn and flour, with exemption for Canadian corn and flour. But
he failed to persuade the Cabinet ; and the Budget introduced in
April, 1903, repealed the tax. A month later Mr. Chamberlain, in
a speech at Birmingham, urged that Great Britain should enter into
a preferential customs arrangement with the Dominions. But he
complicated and confused this proposal by urging that through a
modification of her fiscal policy concerning foreign imports Great
Britain might resume her " power of negotiation, and, if necessary,
retaliation ". In September, 1903, Mr. Chamberlain resigned office,
on the avowed ground " that for the present, at any rate, a prefer-
ential agreement with our Colonies involving any new duty, how-
ever small, on articles of food hitherto untaxed, is unac-
ceptable to the majority in the constituencies". Since that date
the agitation for " Tariff Reform" has been vehemently pursued ;
but, since inter-State policy is not the sole motive of that agitation,
since " Protection" and " Retaliation" are proclaimed as motives
with at least equal prominence, therefore that agitation has confused
the issue presented in this thesis.* Meantime, public opinion in the
Dominions seems on the whole continuously favourable to a Prefer-
ential Customs arrangement. It seems therefore desirable to examine
this particular form of commercial co-operation in itself, apart from
the general question of protective or retaliatory tariffs.

A Preferential Tariff scheme does not necessarily imply Free
Trade within the Empire, although it may be a step in that
direction ; it merely implies a limited Customs Union, imposing
upon imports from abroad duties exceeding those imposed on
imports from States belonging to the Union. The problem of
framing tariffs would be extremely difficult. It could only be
done by tentative and gradual steps, and the effects could
only be known by experience.

* The question of retaliation is not wholly irrelevant, since Germany
penalised Canadian goods owing to the preference granted to Great Britain,
and it was suggested that Great Britain should in turn penalise German
imports. But this incidental " retaliation " is a different matter front
retaliation regularly used as a diplomatic weapon in European negotiation.
Such retaliation has nothing to do with Colonial Preference.

98 IMPERIAL DEFENCE AND TRADE.

But ostensibly the greatest difficulty in the way is the
reluctance of Great Britain to modify her established system
of customs for revenue only. Yet perhaps this difficulty is
not so great as might appear, since those who cling closest to
non-taxation of imports have completely abandoned the abstract
principle on which that system is based — the principle, that is
to say, of free contracts and non-control of distribution.* The
principle of non-control of production, which was once regarded
as a part of free-trade policy, has long been abandoned.

Thus it is very probable that gradual and almost imper-
ceptible movements in the direction of preferential tariffs would
have been received in the same way in which gradual steps
towards control of distribution have been received, that is to
say sometimes with initial protest, sometimes with indifference,
usually with a kind of experimental acquiescence. The campaign
for a reversal of our customs system naturally alarmed and
alienated the public, since it is well known that large and
sudden changes affecting industry and trade have the effect of
revolutionary shocks, whatever the merits or demerits of such
changes may be. In any case they cause immediate difficulty
by upsetting arrangements based on existing conditions. For
instance, the peace of 1815 was followed by a period of great
economic unrest and suffering.

Thus the notion of inter-State preferential tariffs has been
damaged and discredited through being adopted as part of the
programme of one political party. The proposal has been
blurred and adulterated by enlisting the support of those whose
aim is protection or retaliation — partisans whose predilections
have no necessary connection with inter-State policy. Indeed
it is probable that the phrase " Tariff Reform " to-day rather
suggests the policy of Protection as opposed to that of customs
for revenue only. Moreover procedure by public agitation after
one rebuff, in place of patiently awaiting later opportunities of
small introductory experiments, has had the effect of dividing

* Under present conditions, the State has come to have, either directly
or indirectly, a very large measure of control over the management of
railway companies. It can dictate methods of raising capital, the charges
to the public, hours of labour, even to a considerable extent rates of
wages, and methods of working the traffic. — The Times, 1913.

IMPERIAL DEFENCE AND TRADE. 99

the advocates of " Tariff Reform " upon the question of taxing
food-imports. This division offers some hope that the confusing
agitation for Tariff Reform may be dropped by political leaders
as a necessary preliminary to the tentative evolution of one
distinct point — commercial co-operation with the Dominions.
This point should be clearly separated from the general matter
of Tariff Reform.

Analogy supports the argument for the possibility of gradual
tentative steps rather than large revolutionary movements. For
both political parties have by turns infringed the principle of
freedom of contract in doing business with Dominions and
dependencies. Both have pursued the policy of development
by chartered companies,* of State-aided railways, of mail and
telegraph subsidies. It was the party chiefly connected with
Free Trade which pledged the credit of Great Britain in aid
of Canadian loans in 1868 and 1873, and in aid of a South
African loan in 1909. Supposing the Government in 1873 or
1909 had proposed to guarantee payment of interest on all the
debts of the Dominions, a storm would have been raised at
least equal to that which has raged round the question of
Preferential Tariffs. The obvious lesson is in statecraft to
proceed by inches, to avoid large generalities, and rather to
win one's way by particular measures appropriate to special
occasions.

This particular proposal for commercial co-operation has been
treated more fully, because it has been so much discussed in
recent years, and is probably often regarded as being the only
form of commercial co-operation. It has been made the subject of
much rhetoric, much theorising, and much conjectural prophesy-
ing. For the sake of clear notions, emphasis should be laid
on the following points : —

(a) A system of Preferential Tariffs is not the only possible
form of commercial co-operation.

(b) A system of Preferential Tariffs implies some taxation.

(c) A system of Preferential Tariffs should be examined solely
from the point of view of inter-State policy, that is to say

* The Chartered Company of North Borneo received its charter from a
Gladstonian government.

ioo IMPERIAL DEFENCE AND TRADE.

solely as a method of commercial co-operation which might
facilitate political union and defensive combination. All argu-
ments concerning Protection and Retaliation should be ignored
for the purpose of the present enquiry.

Merits of the Question of Preference. — Since to many minds
the phrase " co-operation for purposes of trade " probably seems
to denote simply Preferential Tariffs, some will doubtless inter-
pret this theme as demanding whether Preferential arrange-
ments are an indispensable part of defensive co-operation. But
that is not a scientific interpretation of the theme. The present
writer has stated his conviction that defence cannot be dis-
sociated from foreign policy and that commercial policy, in one
aspect, is a branch of foreign policy : thus defence cannot be
dissociated from commercial policy. Accordingly, any authority
which guides defensive policy must in some degree guide foreign
policy, and by implication, commercial policy also. But any
attempt to forecast the line of commercial policy which shall
be followed in the future by that authority would be as vain
as an attempt to forecast the future strategical arrangements
or the future diplomatic engagements of a united Empire.
Policy in all these three departments must be designed to meet
surrounding conditions, and must be constantly adapted to meet
changing conditions. Defensive or strategical policy depends on
the strength and the probable amity or enmity of foreign powers.
Foreign policy must be shaped to meet the foreign policy of
other nations. So also with regard to commercial policy, no
certain course can be traced for the future.

Two conditions, which overlap one another, seem necessary
for the adoption of a preferential arrangement, first the con-
tinuous desire of the Dominions for preference ; secondly, the
continuance among other nations of their present protective
system. It is already a matter for discussion what effect the
recent reduction of United States tariffs will have on the pre-
ferences actually prevailing within the Empire ; and it is evident
that any adoption of a system of free mports by foreign nations
would alter the whole basis underlying the colonial desire for
preferential arrangements.

The present writer believes that, pre-supposing the con-
tinuance of protection among foreign nations, the Dominions,

IMPERIAL DEFENCE AND TRADE. 101

growing in population and still more in strength and dignity,
will succeed in persuading Great Britain to enter into a pre-
ferential arrangement and to impose differential duties on foreign
imports. Two precedents support this opinion : New South
Wales, for the sake of Australian unity and defensive strength,
waived her predilection for free imports. Yet the unity so
attained, by abolishing inter-State customs, was a triumph for
Free Trade, even though Australia, internally a vast Free Trade
area, imposes protective customs-duties. Again, at the Imperial
Conference of 1911, Mr. Asquith said : " For what does Sir
Joseph Ward's proposal come to ? I might describe the effect
of it, without going into details, in a couple of sentences. It
would impair, if not altogether destroy, the authority of the Govern-
ment of the United Kingdom in such grave matters as the con-
duct of foreign policy, the conclusion of treaties, the declaration
and maintenance of peace, or the declaration of war and, indeed,
all those relations with Foreign Powers, necessarily of the most
delicate character, which are now in the hands of the Imperial
Government, subject to its responsibility to the Imperial Parlia-
ment. That authority cannot be shared, and the co-existence
side by side with the Cabinet of the United Kingdom of this
proposed body — it does not matter by what name you call
it for the moment — clothed with the functions and the juris-
diction which Sir Joseph Ward proposed to invest it with, would,
in our judgment, be absolutely fatal to our present system of
responsible government ".

Yet it is known that in the secret sessions of that same
Conference, sometimes consulting with the Committee of Defence,
the approval of the Oversea Premiers was sought and obtained
for the foreign policy of the Empire.* And in the following
year (1912) certain Dominion Ministers, visiting London, were
taken into the confidence of the British Ministry in a most
intimate and effective manner. Thus, concerning foreign policy,
an influence which was formally denied to the Dominions in 1911
has been in some degree tacitly conceded to them. Accordingly,
it seems probable that their influence, patiently and steadily
brought to bear, must similarly tell on the commercial side of

* See page 68.

102 IMPERIAL DEFENCE AND TRADE.

foreign policy. For every distinct political entity speaks with
a force which has little to do with counting heads. Canadian
opinion, for more than a century, has had an influence on
Imperial history altogether disproportionate to the population of
Canada. The same thing is true, in recent years, of New Zealand.

But this question as to future commercial policy is hypo-
thetical ; for the future attitude of the Dominions must depend
on the attitude of foreign Powers. Yet this point does not
affect the conclusion already reached, that the body which guides
defence must guide foreign policy and, in some degree, commercial
policy also : and this constitutes co-operation for purposes of
trade. In short, foreign policy, defensive policy, and certain
branches of commercial policy are not three different things.
They are parts of the same thing, namely the conduct of inter-
national relations. And the authority which handles international
relations must handle each of these three things.

ADMINISTRATIVE PROBLEMS.

The question of commercial co-operation is part of the wider
subject of joint political action. Accordingly an analysis of
methods of commercial co-operation would be incomplete without
indicating the possibility of such joint administrative action as
may give permanence and regularity to commercial co-operation.
It is not necessary to define precisely any form of administration,
or to say " the thing must be done in this way ". It is enough
to say " the thing can be done in some such way as this ", to
indicate some practicable method, to show that the thing is
possible. It has been already pointed out that an inchoate
central administration seems to be already in existence in the
form of the Imperial Committee of Defence and the Imperial
Conference, these being institutions which may proceed either by
self-development or by laying the foundations of something
further.

It was said in the introduction to the theme, " Both Schools
cannot be right ".* This means " Both Schools cannot be ulti-
mately and permanently right ". If a complete system is to be

* United Empire, March, 1913.

IMPERIAL DEFENCE AND TRADE. 103

forged all at once, if the defensive scheme of the Britannic lands
is to emerge full-grown and clad in panoply, then one or other
of the two alternatives must be chosen. But that is not the
British method. The British Constitution was not forged on
a single anvil at a given time. Our present relations with the
Dominions were not laid down by any group of statesmen at
any given time. These are matters of constant growth, experi-
ment, and modification in spirit, if not in form. Thus, for
purposes of immediate practical application, the school which
excludes trade from the purview of the central body may be
immediately right, even if mistaken as to the possibility of
making this exclusion permanent and final. Sir Joseph Ward
himself indicated in 1911 in what way this problem may be
worked out ; for he is prepared to compromise with conservative
opinion by taking what he can get, limiting the functions of the
central body at first. In such matters it is essentially and
literally true to say " The half is greater than the whole " ; for
the whole is an unknown quantity, indefinable and therefore at
first unattainable. The half, once achieved, indicates what the
whole shall be, and gradually leads to its definition and achieve-
ment. The precise powers of the central body need not at first
be defined. British experience seems to indicate that this body
should at first be in the nature of a " Convention ", to confer, to
consult, to recommend, and so to guide policy.* The central
body will be in constant communication with the Executives of
all the self-governing States. In case of urgency it is possible
for all the Dominion Cabinets to sit simultaneously in their
respective capitals and to hold hourly communication with the
central body. At the present time a telegram despatched from
the Liverpool Cotton Exchange to the Chicago Exchange receives
a reply within six minutes, and there is no reason why such
prompt methods of business should not be adopted in public
affairs, f

* Judge J. A. Jameson, in his book The Constitutional Convention,
reckons 152 Conventions in the United States — mostly State Conventions —
between 1775 and 1864.

f While the Commonwealth Bill was being considered in London in 1900,
the Australian Premiers were sitting in Conference at Sydney and were con-
sulted by telegraphic despatch.

104 IMPERIAL DEFENCE AND TRADE.

But such urgency is exceptional. As a rule, agreement may be
reached by more leisurely paths. The central delegates, after dis-
cussion and after watching the experiments which are actually in
progress, may report their conclusions to the several States, to be
examined by the Cabinets and, in necessary cases, to be submitted
to the Legislatures.

It may be objected : — "Agreements so reached are merely
treaties between States : they do not constitute real continuous
trade co-operation. For each agreement requires the assent of each
State : thus by withdrawing this assent, any of the States may at
any time undo the agreement ". There is, of course, some force in
this objection ; for it is easy to find flaws in any system. The
object of statecraft is to find the line of least resistance, since
perfection is unattainable. The objection may be refuted by
pointing out that such agreements would differ from international
treaties in two ways : —

1. The agreement would be a group of treaties between half-a-dozen
States already joined in one political bond.

2. The threads of this web of treaties would be in the hands of a
central body, holding authority from all the States. Thus the States
would not be merely negotiating severally with one another. Rather
they would meet for negotiation in the persons of their representa-
tives.

The stability of this method would not be affected by the fact that
a commercial arrangement so established might be modified or
replaced or annulled after experiment. Any legislative or executive
regulation in any State is liable to such changes : and regula-
tions concerning the exchange of commodities especially demand
perpetual watchfulness and occasional adjustment. Through
the action of the central body, consulting with the several
States, such modifications could be effected in the cautious manner
already indicated. This constant watchfulness and guidance
would, in fact, be a part of commercial co-operation through a
central body.

It may be added that logical completeness and homogeneous
symmetry are not essential to a working arrangement. Bavaria,
Wurtemburg, and Hamburg bear different relations to the Germanic

IMPERIAL DEFENCE AND TRADE. 105

Federation ; and there are differences in the relation of the Canadian
provinces towards the Canadian Federal Government.*

It may be thought that this method of guiding commercial policy
as a part of foreign policy is impracticably cumbrous. It would pro-
bably prove less cumbrous and less impracticable than the method
now pursued in the United States, where foreign policy is conducted
by two separate and often discordant authorities, the Executive and
the Senate. In the British States, since Ministers sit in Parliament
and are responsible to Parliament, the functions of Government over-
lap. Each Cabinet is in constant touch and necessarily in agreement
with its Parliament. In turn, the central body would be in constant
touch with the Cabinet of each State. In fact, as Seeley has pointed
out, a British Cabinet is really the law-making power as well as the
treaty-making power. This combination of functions in the Cabinets
would much facilitate the working of an inter-State system for pur-
poses of foreign policy, including trade.

EXECUTIVE FORMS.

Any attempt to define the form of the central authority would
be premature and inappropriate. Attempts at definition have been
made and have been dropped. For instance, the proposal of Colo-
nial representation in the existing British Parliament has now been
generally abandoned. At the Imperial Conference of 1911, Sir Joseph
Ward proposed an elected Parliament of 300 members, an elected
Imperial Council of Defence or Council of State or Senate, consisting
of 12 members, and an Executive of 15 members. His scheme
received no support in the Conference. Dr. T. J. Lawrence suggests
a small central body, to include " among others the British Prime
Minister and Foreign Secretary . . . with a representative of the
Ministry of the day in each of the . . . Dominions ". Mr. Sidney
Low lately discussed the possibility of a " Federal Congress " :f but
rather suggested the probable development of existing arrangements,
notably the Imperial Committee of Defence and the Imperial Con-
ference. This point has been treated on pages 67-69. Mr. Borden,

* Toronto, October 24, 1913. — The Inter-Provincial Conference begins
at Ottawa on Monday. . . . Alberta will suggest that all three prairie
provinces should have control of land, timber, minerals, and other natural
resources, so as to be on an equal footing with the older provinces.
— The Times.

f King's College Lectures on Colonial Problems, 1913.

106 IMPERIAL DEFENCE AND TRADE.

in a recent speech, takes the same line, and dwells upon the need of
cautious and gradual development : — " Mr. Borden emphasized the
importance of the Imperial Defence Committee, and explained at
length its powers and responsibilities. He insisted that it was the
conclusion of those who had most closely studied the subject that
for the present the necessary consultation and co-operation between
the Governments of the Dominions and the Government of the Mother
Country in respect of Imperial defence and foreign policy could most
effectively and securely be had through the medium of this Com-
mittee. He added : — Already Ministers from various Dominions
have been summoned to its meetings. Five Canadian Ministers were
present at one meeting in 1912, and two Canadian Ministers were
summoned during the present year. No one would pretend that
the presence of a Canadian Minister in London to attend the meetings
of this Committee and to consult with the British Prime Minister and
the Foreign Secretary upon matters of foreign policy would embody
a final solution of the great problem that confronts us. But the genius
of our race is to proceed in such matters slowly and cautiously, and
to depend for results rather upon experiment and experience than
upon logic. As I took occasion to say last year in England, Canada
will not be merely an adjunct even of the British Empire ; but we
have no desire to force the pace unduly : we know we must creep
before we walk ". — The Times, 1913.

EVOLUTION OF FEDERAL ARRANGEMENTS.

In fact, we are watching a process of evolution which may be
said to have begun with the Confederation of the New England Colo-
nies in 1643 ; and which, after various proposals and tentative efforts,
reached its first definite stage with the formation of the United States
Government in 1788. Then came in succession the three British
movements of union, namely : The formation of the Dominion of
Canada, the Commonwealth of Australia, and the Union of South
Africa. Everything points to a continuation of this process of evolu-
tion, whereby a closer union may be effected between the States thus
severally consolidated in themselves. In every one of those four
unions there was an intermediate stage of experimental and incom-
plete combination ; and in each case the way to closer union was
found by means of consultation in Conferences and Conventions.
Thus the probable future path seems to be indicated by experience.

APPENDIX II.

BIBLIOGRAPHY.

The following books provide an introduction to the main topic : —

History of Federal Government
The British Constitution
English Colonisation and Empire
The Expansion of the British Empire
A Short History of Colonial Policy

Federations and Unions within the British
Empire

The Historical Geography of the British}
Colonies J

The Expansion of England . . . . 1

Introduction to Political Science . . }

Greater Britain . . . . . . "j

Problems of Greater Britain . . . . J

The Imperial Conference

By T. H. Freeman
By W. Bagehot
By A. Caldecott
By W. H. Woodward

By H. E. Egerton

By Sir C. P. Lucas
By Sir J. Seeley

By Sir C. Dilke
By R. Jebb

LONDON :

THE PRESS PRINTERS, LTD.
69-76, LOXG ACRE.

YC 09633