A NEW IMPERIAL PREFERENCE

SCHEME

As that reduction of freights goes on it makes the locality of the coal mines of less and less importance, provided they are near water transit to the sea, or can secure very cheap land transit. It is possible to look forward to a time when the production of fuel throughout the world will be so abundant that a new Jevons may arise to discover that the decisive point on which the material welfare of nations turns is the cheapness of transport and facilities in the accommodation of ports. In these circumstances will not the old advantage of Great Britain's geographical position reassert itself, and the immense imperial coast line of 42,000 miles, washed by the tide in every quarter of the world, stand us in good stead? It remains for Government to pave the way for cheapness of transport and improvement of the ports throughout the kingdom and empire. I have no hesitation in asserting that any one who examines this question will come to the conclusion that the advantages of position are all on our side, but that the high charges for transport are a severe handicap on nearly every branch of our trade.— Lecture by invitation in May 1901 before the Society of Arts.

WITHOUT Venturing on any dispute as to the precise circumstances in Canada, it is certain that the defeat of Sir Wilfrid Laurier's treaty for reciprocity with the United States means in the United Kingdom the victory of preference. The Radical party hailed the treaty as the deathblow of preference, and they cannot complain if all that they said and wrote is now remembered against them. It is difficult to understand why a party should so deliberately espouse an unpopular cause as 'to bang, bar, and bolt' the door in the face of the Empire, unless we remember how in politics as well as in religion the letter of the law killeth, and a fetish may be made of a principle of strictly limited application. Any form of preference conflicts with the Radical principle of buying in the cheapest market-a principle which might easily be stretched to the belief that it is far more desirable to deal with a Chinaman than an Englishman. The policy of laissez-faire necessarily regards agreements with the Colonies as entanglements. Its ideal is that the six Governments should advance like six armies, under six different generals, pursuing policies which may or may not be mutually destructive. In the circumstances, the Radical party has only itself to thank for the fact that the salient feature of the situaVOL. LXXI-No. 420

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tion to-day is that in policy it is hostile, not merely to the Unionist party, but to the Unionist party in alliance with the rest of the Empire.

It may be asked how, with such advantages of position, the Unionist party has failed to beat the Coalition. My answer is that they threw away their advantages. Their campaign was suddenly diverted from one of grand imperial scope to one of a purely sectional character, by making a vital issue of the defence of the landowning interests of the country; and, in the matter of preference, they have all along made the mistake of doing precisely what their enemy wished them to do, by limiting the discussion of preference to its most unpopular side of preference by means of food taxes. This form of taxation has been historically burned into the minds of the people of Great Britain as oppression for the many for the benefit of a mere section of the population. The false cry Your food will cost you more' has been a most potent weapon in the hands of demagogues. Pledges of the most binding kind were given by the Unionist leaders that in no circumstances would anything be done which would increase the cost of living of the working classes. They were of no avail. The explanation lies in the fact that the Unionist party has all along allowed itself to be tricked into discussing preferences as though they were limited to an unpopular tax, and thereby sacrificed all its best weapons. Had a different policy been pursued, a policy of conceding preference wherever possible, a policy which would have benefited not merely Canada and Australasia, but also South Africa and India, we would by now have carried all before us.1

If I have dwelt on maxims of war about not doing what an enemy wishes one to do, I can also bear in mind the teaching of a great master of war about the inadvisability of changing plans of campaign. Moltke told his generals that a leader might choose a plan which was intrinsically by no means the best, and, persisting in it, achieve success, whereas if he had taken the second best and then vacillated to the ideal plan he would probably fail. My answer is that we are in winter quarters. We have failed, but I propose that we should try again with a plan of vaster scope, of which the old one need only be a portion if the leaders so wish it, and under it we will trump the false cry of the enemy by saying to the people of Great Britain with absolute truth' Your food will cost you less.' Not the least important aspect of the proposals which I am about to make is the prospect of divisions in the ranks of our opponents.

'The idea of preference by means of a tax on foreign food was originally suggested by the Canadian Government, under the impression that it was the easiest if not the only means of conceding a preference.

FOREIGN PREFERENCES

It is first necessary to correct the diligently fostered idea that the field of preference is limited to food taxes. Apart from taxes altogether, foreign countries afford many examples of the workings of preference. We may summarise some of them:

(1) Examples, such as the Erie Canal, conducted free of tolls. (2) The great development of rivers and canals in Europe by other than private enterprise.

(3) In the United States, Belgium, and Germany the railways are used to strengthen the hold over external markets by rebates for exports.

(4) In Germany, Austria, and Norway the shipping is not allowed to alter freights except by Government permission, and the Government also dictates the carriage of goods by weight instead of volume when it favours the trader. Through bills of

lading are also given.

(5) It is stated that sixty per cent. of the trade of Germany is carried on under a preferential system.

Contrasted with this position the existing laissez-faire system in the United Kingdom has resulted in transport charges being generally the highest in the world, for both internal and external transport for the inter-Imperial and home trades.

PREFERENCES UNDER THE UNIONIST GOVERNMENT

Apart from penny postage, to which I intend to refer later, there were several distinct attempts to concede preferences within the Empire under the last Unionist Government:

(1) The Home and Colonial Governments attempted to restrict their buying orders to the Empire.

(2) Trustee stock was extended to the Colonies, thereby sending them a considerable amount of capital.

(3) On certain African railways cotton was carried free of freight in order to establish cotton-growing within the Empire.

(4) The Crown Colonies were able to borrow money under the Home Government's guarantee, and in return placed their orders in the United Kingdom.

(5) The Pacific Cable was laid with Imperial subsidies to bring down the telegraphic cost of the carriage of speech.

UNDER THE RADICAL GOVERNMENT

Though both preferences (3) and (4) were done away with by the present Government, we may note some striking inconsistencies. Of these the most glaring is the adoption of a Conserva

tive measure, the Patents Bill, forcing patents to be worked in the British market, and so conceding a most desirable preference to British labour. To their credit also they redressed the preference to foreign ships in the load-line regulations. Incidentally, I might suggest an easy remedy for them in reference to the outcry about foreign merchant ships carrying guns in their holds. By agreement let the Empire deny all opportunities of port and refitment to vessels so equipped. As his Majesty's Government state that no vessels are so equipped, there need be no fear of any grievance in the immediate promulgation of such regulations. The abolition of the light dues I would hold as an inducement to lower freights for Imperial trade. Taxes on transport are bad, and these have led to special retaliation in the United States against British ships. This, however, at the best is only tributary to my main scheme. Our object should be, not to help particular trades or localities in the Empire, but, free from all taint of favouritism or injustice to any part, to help the Empire as a whole. Such was the case with the great work of penny postage within the Empire, or the preferential carriage of speech, so that a letter to New Zealand is carried for two-fifths of the cost of a letter to France. It is an enormous preference in the carriage of speech, and if ever we have penny postage to Europe I hope it will not be before we have halfpenny postage at home and to the Empire.

PREFERENTIAL TRANSPORT

We have, then, the preferential carriage of speech, and I now propose to extend it to the carriage of goods within the Empire by bringing about a lower cost of transport through the use of subsidies than is at the disposal of foreign countries. Any reduction in the cost of freight thus obtained of necessity benefits both producers and consumers within the Empire, the producer by strengthening his hold on the market and working on a larger scale, the consumer by the reduction of price which ensues. The shipowner, dealing with larger cargoes or full cargoes both ways, is enabled still further to reduce freights. Thus, under the laissezfaire system which resulted in Sir Wilfrid Laurier's Reciprocity Bill, Canadian wheat would actually have risen to the American level in price--an increase of 2s. 8d. per quarter--whereas under this proposal, in proportion as freights are cheapened to Canada so the price of bread would tend to be lowered. Therefore the practical policy of the Radicals was to increase the price of the The balance of evidence appears to us in favour of the view that, owing to the keenness of competition between merchants, any reduction of freight does ultimately reach the consumer in the price.'-Report of Sir Alfred Bateman and Sir John MacDonnell, Vol. 5 of the Report of the Royal Commission on Shipping Rings.

loaf, the practical policy of the Tariff Reformers under my proposals would be to lower it. Grant the claim that Canada can supply the United Kingdom's wheat requirements twenty times over from her immense agricultural area, then, if she has a cheaper transport than the foreigner to bring us wheat, meat, and lumber, it will do infinitely more for her than a slight tariff advantage. Even the concession of a preference to British manufacturers was not a sentimental action, but a business desire to give the shipping fuller cargoes from east to west, so reducing the freights both ways and developing her east to west railroads. The trade of the British Empire is mainly by sea, and immense as is its area of upwards of one hundred times the size of the United Kingdom, that vast land surface is united by sea roads and depends for its welfare on cheap sea transport. In fact it would be almost impossible to concede preferences to India, South Africa, and many Crown Colonies except by conferring on them the boon of cheap freights for their Imperial trade. In that way, and in that way only, can we cut the ground from under Mr. Asquith's feet when he jibes at the Unionist for forgetting India, asks why we help the Canadian farmer and leave the Canadian lumberman, the South African, and Australian wool merchant in the cold. In that way, and in that way only, can the Unionist party win back the boroughs, without whose support they can never hope for a majority independent of Mr. Redmond. A system of preferential freights is one which can be equally applied in all inter-Imperial trade; it is one which will leave no sense of favouritism or injustice in its train, and will conciliate a mass of voters who have been alienated by the proposed food taxes from the party which is, when all is said and done, the party hitherto instinctively trusted by the people in foreign and Imperial policy. By this policy the cost of living will be reduced, and not only will food and raw material come in cheaper, but our manufactured goods will also benefit in corresponding degree. Larger cargoes both ways will tend to lower freights, and there will result growing prosperity in our Empire. Increased Imperial resources mean additional contributions for the Navy defending commerce, and larger subsidies to lower the freights still further."

A BOARD OF TRANSPORT

'How is all this to be effected?' it may be asked. My answer is: Let the Empire nominate a Board of Transport, consisting of men versed in transport questions but having no pecuniary interest

3 The fact that the present President of the National Liberal Federation is an advocate of the entire abandonment of laissez-faire' and urges 'active Government aid to trade' suggests how easily a schism could be made by the new preferential proposal in the ranks of the Radicals.