What colonial preference means
WHAT COLONIAL PREFERENCE MEANS.
Reprinted from The Produce Markets' Review of July 13 and 20, 1907.
Whether we are Liberals, Conservatives, or Labour men, all parties in the State wish well to our fellow subjects beyond the seas, and would be glad to help them if we could. The Little Englander is, in fact, an imaginary being. We already relieve the Colonies of the necessity of external defence at a cost to the struggling millions of this heavily-laden country of some 65 million pounds a year, or, if the interest on our debt be added, of some 90 million pounds, and it is to be borne in mind that our debt was to a large degree built up in the acquisition and defence of our Empire. Beyond this we have supplied them with many hundreds of millions for their development, and of late years have made their securities Trustee stocks, to the considerable loss of our own funds. Further, we have given to our self-governing Colonies entire internal liberty, without any reservation of the vast Crown Lands contained in them, or any return for our past expenditure in their acquisition and development. We have left them complete freedom to tax the manufactures of the home country, and to limit the immigration of our own people and of our fellow subjects in Crown colonies and possessions, to the vast and fertile regions whose administration we have handed over to small handfuls of our colonists. This represents a bold, a generous, and a broad-minded policy, deliberately entered upon and pursued by the Mother Country for the benefit of her children beyond the four seas. Nor does anyone at home desire to take back anything that has been given, or to limit the freedom of these great new English communities. Rather it is the universal wish to see them acquire every fresh liberty they may want, if they are still hampered in any way by old traditions. With the passage of time we hope to see the Colonies becoming great States within the British Commonwealth. As years go on we look to our children becoming our allies—under a common Crown, and to our race in our own dominions, and we may even hope in America, not only progressing morally, socially, and economically, but enforcing a Pax Britannica throughout the world. This is a great ideal for us all to strive for. Yet it is what Lord Rosebery has called sane Imperialism, devoid of covetousness or envy of other peoples' prosperity or possessions, and free from the slightest taint of that music-hall Jingoism which is so painful a growth of late years. We are all content with our family estate, and while we mean to hold it against all comers, our chief desire is for its rapid development.
As we grow older we all become aware in our home circles that the younger generation thinks that their parents fall behind the age and become old-fashioned in ideas, while the elders think that the young wish to go too fast, and that they are thus liable to fall into errors which experience has shown to be the lot of young men in a hurry. This condition of things is repeated on a far larger scale in our Imperial family. Our colonists think the old folk at home have fallen into the vale of years, if they have not reached their dotage, and that all wisdom is to be found among the younger generations across the seas. But (as Jowett remarked to the undergraduate who obtruded his opinion among grave and reverend seniors) we are none of us so wise as we think, even the youngest among us. While the old country is willing to learn from its children, it has a long history of error and of slow progress burnt into its memory, which newer communities have not. When, therefore, our colonists adopt our discarded methods we can look on tolerantly, while we reflect that the diseases of youth have to be gone through before maturity is reached, and that this is all in the natural course of humanity.
Especially is this attitude natural with reference to Protection, that old economic dragon slain by us so long ago and after such fierce struggles. That new countries should espouse the heresy is natural enough, for in them it does not affect their food, while indirect revenue is far more easy to raise in young and scattered communities, and interested parties have a freer hand in so working fiscal arrangements as to divert to their own pockets what should be public revenue. Hence it is natural enough that our colonists should have adopted Protection, as it has not such obviously evil effects in new countries, with their untapped wealth and their resources enormous in proportion to their sparse population. It is also natural enough that they cannot realise that we are in a totally different position, with our small and densely peopled islands, with their economic developments going back for two thousand years. Our Colonies have endless supplies of food for the asking, and they have not reached the stage when they can profitably manufacture for those outside their boundaries. They cannot, therefore, realise that the United Kingdom is unable to feed itself without importing corn and meat from abroad, and that we also live by manufacturing for the world, for which purpose we have to import increasing quantities of raw materials from which to work. In short, the Colonies export food and raw materials, and we export the manufactures, by which it is stated that one-third of our population live. Not content with their natural development in opening up virgin continents, our Colonies, hasting to emulate old communities, wish also to manufacture, a natural ambition which in the course of years would be fulfilled without injury, but which can only be attained at present by Protection: that is, by hindering their normal development by raising the cost of living, and thus delaying the growth of agriculture, of mining, and of other exploitations of the soil. All this, however, has nothing to do with us at home. We have given our colonists self-government, and this includes absolute fiscal freedom, even when they proceed to shut out by duties those manufactures by which the Mother Country lives. We think they are mistaken, but we do not complain, for they are free to do as they please. Of late years, however, the self-governing colonists have gone further, and they now ask the Mother Country, which already gives them practically absolute freedom to enter her markets, to go further and to surtax the imports of foreign countries.
Business and Preferences.
An immense amount has recently been heard of Colonial Preferences, and any amount of laudable sentiment has been imported into the question. This, however, is a matter of business, and it has to be regarded commercially, which is the main, if not the only, standpoint from which a change in our fiscal system could be justified. We design, therefore, to look at this particular proposal in the cold light of statistics, to see what it involves arithmetically regarded and what results its adoption would be likely to have on the preponderating partners in the Empire—the 40,000,000 Britons at home, as compared with the 11,000,000 abroad. Mr. Chamberlain, the apostle of the Protectionist revival, has himself stated what is indeed obvious, that we cannot give preferences without taxing food. This is a serious initial difficulty in a country like this, which can only be kept alive by foreign supplies of our daily bread, our meat, our butter, our cheese, and so on, for it is believed that the supplies of home-grown food-stuffs are insufficient to supply more than one-third to one-half of our population. It is to be remembered also that although this question is generally discussed upon the dear or the cheap loaf, this is now only a portion of the problem. Imports of meat and dairy produce were not conceivable in the Corn Law days, but they are now of the last importance. If we were to have dearer bread we should at the same time have dearer beef, mutton, pork, bacon, butter, and cheese. Of course, we can by Protection materially raise the price of all these commodities, but it is difficult to imagine that the British public would stand such an application. It is true that Germany has so taxed meat that it fetches is. 6d. per pound in Berlin just now, but he would be a bold statesman who would try such an experiment in London. Of course we are told that no such results would follow here. The tax on food would be so moderate that it would not be felt, particularly as the foreigner would pay it. Precisely the same arguments have always been used in recommending Protection. It always begins, as it did in Germany, in a small and timid way, but the appetite of the protected grew so rapidly that the taxes have been raised three times in thirty years. Nor do the Germans find that the foreigner pays, although they do find that the prices for home produce rise in proportion to those of the imported foods, to the benefit, no doubt, of the German landlords, but with no benefit to the State either in revenue or otherwise.
Trade of the Empire.
Before considering the question of taxing food, it is well to look at the comparative statistics of our oversea trade, and to gather generally what is involved by the demands of our self-governing colonies, Canada, Australia, and South Africa (and of no other part of an Empire of which they form only one fortieth part in population).
The following is taken from the Blue-book Cd. 3328, and shows the trade of the entire British Empire in 1905:—
Values of the Foreign and Inter-Imperial Trade of the British Empire in 1905.
|Trade of the British Empire with foreign countries—|
|Total foreign trade||£1,012,141,000|
|Trade of the United Kingdom with British Colonies and Possessions—|
|Percentage proportion of—|
Having considered our import trade as a whole, we have next to deal with the various food-stuffs which reach us from oversea. The following has been compiled from the Annual Returns of Trade and Navigation published by the Board of Trade.
IMPORTS OF FOOD, 1906.
Summary of Class I.
|A.||Grain and Flour||51,429,402||9,604,589||6,846,598||67,880,589|
|B.||Meat, including animals for food||39,152,754||12,810,914||62,785||52,026,453|
|C.||Other food and drink||84,427,651||15,009,852||14,094,784||113,532,287|
It will be seen, taking the figures as a whole, that more than three-quarters of our supplies reach us from foreign countries, and less than one-quarter from the British Empire. Of this amount less than one-sixth reaches us from the self-governing Colonies, and what reaches us from the other parts of the British Empire is not, generally speaking, food at all, but is mainly cocoa, coffee, and tea. The last-named commodity obviously, by the way, requires no preference, as it has practically already ousted China from our markets. The request of our self-governing Colonies is, therefore, that for less than one-sixth of our supplies we should raise the price of five-sixths of the food supplies we import, and also of the £200,000,000 or £300,000,000 of foods we produce at home. In other words, that for the sake of £37,000,000 worth from our Colonies we should raise the price to ourselves of £400,000,000 or £500,000,000 of food-stuffs. Assuming that the duty average 5 per cent., the cost to the nation would be £20,000,000 or £25,000,000 a year, and at 10 per cent. £40,000,000 or £50,000,000. It is right to add that these figures are not quite correct, as a certain proportion of the Canadian supplies are shipped by way of the United States, and are thus returned as foreign supplies, but this correction would not materially affect the above calculations.
We are also told that the supplies of food from our Colonies would rapidly increase if they enjoyed preferential duties. They would indeed need to do so if the British nation were not to die of starvation. The question is whether it is practicable for the supplies to increase so quickly that this result could be avoided. What would be required would be a quadrupling of our colonial supplies within a year or two—a result so miraculous that it may safely be dismissed as impossible. Already Canada is opening up the wheat fields of Manitoba as fast as is practicable, and it is quite possible that in ten years or so they might supply us with the bread we require. This process, however, is already going on as fast as the ground can be broken up and sown. The Manitoban farmers are doing this without preference, and presumably at a good profit. Why, then, should we starve ourselves in order to further enrich them? Similar remarks apply to Canadian and Australian dairy farmers, &c., who make and ship to our free market every pound of produce they can prepare. Besides, it must be recollected that a large portion of the Canadian food supplies at present traverse the United States in bond for shipment from Portland or other American ports. If preferences were given by England, this privilege can be withdrawn in a minute by the order of the President. Possibly the food could then be shipped from Halifax or from other Canadian ports, but, of course, at an extra cost, for it would otherwise not at present be sent from American towns.
The next division in the Board of Trade returns consists of raw materials of all sorts, and here we enter on a somewhat controversial question. Many of the colonists, though willing to tax our food, see that to tax the raw materials of the manufactures by which we live would indeed be a large order. Yet, as was pointed out by our Government at the recent Imperial Conference, the taxation of raw materials must necessarily follow if food preferences are given. Some Colonies do not send us food at all, such as South Africa, and others, such as Australia, send us mainly wool or metals. It is, therefore, necessary to consider the following table of our imports of raw materials:—
IMPORTS OF RAW MATERIALS, 1906.
Summary of Class II.
|A.||Coal, Coke, and Manufactured Fuel||47,037||63||47,100|
|B.||Iron Ore, Scrap Iron, and Steel||6,632,079||29,535||105,142||6,766,756|
|C.||Other Metallic Ores||6,622,439||1,948,805||458,900||9,030,144|
|D.||Wood and Timber||21,279,840||5,039,303||1,188,267||27,507,410|
|G.||Other Textile Materials||7,401,587||724,431||8,898,695||17,024,713|
|H.||Oil Seeds, Nuts, Oils, Fats and Gums||16,662,248||2,746,679||6,225,287||25,634,214|
|I.||Hides and Undressed Skins||5,504,939||3,446,244||1,748,513||10,699,696|
|J.||Materials for Paper Making||3,675,879||189,018||70,512||3,935,409|
It will be seen that, taken as a whole, approximately seven-tenths of our raw materials come to us from foreign countries, two-tenths from self-governing Colonies, and one-tenth from other British possessions. The prospect of taxing the articles embraced in the table is little short of appalling. We are, to begin with, to pay £20,000,000 to £50,000,000 more for our food, and then to pay £10,000,000 or £20,000,000 (at 5 or 10 per cent.) on the materials imported for our manufactures. Besides this we are to pay a similar percentage of increase for such of our raw materials (wool and timber, for instance) which we also produce at home. The case of raw materials also differs materially from that of food, inasmuch as a far larger proportion is produced in British oversea possessions other than self-governing Colonies. Why should India and the Crown Colonies be left in the cold while the Dominions of Canada and New Zealand (the latter with about the population of Birmingham) and the Commonwealth of Australia receive their preferential millions? Such favouritism would be grossly unfair. It is true that India, with its 300,000,000 of people, objects to the preferences asked for by the 11,000,000 self-governing colonists. But India, like the Mother Country, is said to be turning from the new light illuminating the Antipodes and British North America, to say nothing of that emitted by the economic sages inhabiting South Africa. Yet the Mother Country would have to be impartial and to scatter its gifts fairly all round among its children. It is worth considering some of the details of our imports of raw materials, for it will be seen that they affect practically every interest in the country except the coal miners. The metal workers, the textile weavers in Lancashire and Yorkshire, the boot-makers in Nottingham, the builders, the newspaper people (including those violent Protectionists the yellow halfpennies), the oil-refiners, the cattle-food makers (and through them the farmers), would all be severely hit. What with dearer food and dearer materials, it would be impossible for the British consumer, paying much more for his nourishment, to pay more also for his clothes, his furniture, and his houses. As regards our exports of manufactures, they would come more or less to an end without a liberal system of drawbacks, ending inevitably in export bounties, which, again, would have to be paid by the home consumer. In calculating these drawbacks the duty on the raw material, the extra wages necessary to pay for dearer food, the larger capital employed, and the requisite return upon it would all have to be considered. The drawbacks would, no doubt, be fixed with the aid of some such impartial body as the Tariff Commission, with all the openings for widespread political corruption which such a system would lead to, as it has done in most Protectionist countries. These are a few of the grounds on which the taxation of raw materials is unthinkable, though it would logically and inevitably follow if we adopted Colonial Preference.
The next great division in our Imports need not delay us long from the colonial point of view, for our self-governing Colonies send us practically no manufactures. The following analysis is, however, important to the Mother Country from a different point of view.
IMPORTS OF MANUFACTURES, 1906.
Summary of Class III.
|A.||Iron and Steel, Manufactures thereof||8,348,110||992||10,650||8,359,752|
|B.||Other Metals, Manufactures thereof||17,313,827||4,076,865||6,841,034||28,231,726|
|C.||Cutlery, Hardware, Implements||3,762,161||6,862||2,593||3,771,616|
|D.||Electrical Goods and Apparatus||1,186,631||994||1,187,625|
|G.||Wood and Timber, Manufactures of||1,888,629||119,638||8,461||2,016,728|
|H.||Yarns and Textile Fabrics||39,234,930||1,181||2,248,346||41,484,457|
|J.||Chemicals, Drugs, Dyes, etc.||8,894,668||246,429||963,014||10,104,111|
|L.||Earthenware and Glass||4,215,588||3,574||4,219,162|
Colonial preferences would inevitably entail a general tariff on all foreign goods, including manufactures, for raw materials and finished commodities are so interlaced that this result must follow. Besides, a tax on foreign manufactures is one of the main planks in the Tariff Reform platform. We are to tax these goods to give work to the home workers, already to be so overburdened with duties on their food and their raw materials. Our mechanics would indeed sorely need such help under the terrible change in their position. Whether making everything dearer would help them at all is quite another question. Free Traders would argue that a general tariff would only add to their burdens. Here, again, it has to be borne in mind that our imports of foreign manufactures are only a tithe of our home production, and that the tax of 10 per cent., or £15,000,000 a year, on our imports, proposed by the Tariff Reformers, would mean a tax beyond of possibly £45,000,000 or £60,000,000 a year on the British consumer, of which, say, one-quarter only would reach the Treasury. It has to be remembered also that these so-called imported manufactures are in almost every case really the raw materials of some other manufacture or industry at home. In looking through the above analysis of manufactures we can only think of earthenware and glass that are not so, and even they presumably yield a profit to our china shops, which would decrease under Protection.
To finish our table of imports we give for completeness only, and as needing no comment, a return of our miscellaneous imports, two-thirds of which represents the value of the Parcels Post.
IMPORTS OF ANIMALS (NOT FOR FOOD) AND MISCELLANEOUS ARTICLES, 1906.
|Miscellaneous and unclassified||1,863,269||179,782||399,575||2,442,626|
SUMMARY OF IMPORTS INTO THE UNITED KINGDOM, 1906.
|Class I.—Food, Drinks and Tobacco||179.650,109||37,435,483||121,072,564||238,158,156|
|Class II.—Raw Materials and articles mainly unmanufactured||147,906,599||38,153,172||25,418,556||211,478,327|
|Class III.—Articles wholly or mainly manufactured||136,303,283||5,655,517||13,850,591||155,809,391|
|Class IV.—Miscellaneous and unclassified||1,863,269||179,782||399,575||2,442,626|
We give also, for purposes of reference, the following analysis of our total imports for the five years ended 1905:—
Results of Preference so far.
In the fifteen years from 1891 to 1905 (the last years shown in the Statistical Abstract), the total British imports and exports increased £128,000,000 as a whole. Of this total increase only £12,000,000 went in exports of British produce to Canada, Australia, New Zealand, and South Africa—or one-tenth of the whole. To Australia, taken alone in the same period, and notwithstanding the preferences, our exports fell off £5,000,000. During the whole fifteen years the proportions of exports in our foreign and Imperial trade remained unchanged, and were 77 per cent. for foreign countries and 23 per cent. for the Colonies, including re-exports. More than three-quarters of our trade was thus extra-Imperial; and we are asked to jeopardise this for the sake of one-quarter, most of it in goods which we do not, and cannot, produce. Our exports of British goods in 1905 were as follows:—
|Canada (including Newfoundland and Labrador)||12,341,453|
|Total to Self-governing Colonies||£52,118,574|
|Other British Possessions||18,322,849|
|Total to British Possessions||£113,437,811|
|Total to foreign countries||£216,378,803|
|Total oversea exports (not including re-exports)||£329,816,614|
It will be seen from this table how preponderating is the share of our British Indian Empire, and how insignificant is the relative position of the various groups of our self-governing Colonies. India, it will be recollected, strongly objects to preferences, because we cannot take nearly all her produce, and to irritate her foreign customers could only cause injury. Our exports to our chief foreign customers in 1905 were as follows:—
|Germany (not including what may go through Holland and Belgium)||£42,742,300|
|France and Colonies||24,000,000|
|China (excluding Hong Kong and Macao)||13,298,828|
Here, again, the relative insignificance of the trade with our self-governing Colonies, taken separately, is evident, and also how unimportant the item is as a whole.
Preferences to British Goods.
It will, of course, have been obvious that we have not considered the other side of the question—namely, that the Colonies would, in return for our preferences, give us a more favoured position on their markets. As a matter of fact, these concessions have already been made to us to a large extent, but in practice they have turned out to be generally illusory, though useful in particular instances. In fact, the colonists start from the basis of effectually protecting their own internal factories against all comers—including the British ones, who are the most formidable. The door of imports is locked against us, and it is very little good, except as a compliment, to double-lock it against the foreigner. In counting up the reciprocal values of concessions it must also be remembered that colonial preferences mean a reduction in duties in the Colonies and possibly a further reduction in the price to the consumer, owing to British competition being even remotely possible. All this means a reduction in the cost of living. English preferential duties would, however, have to be imposed to begin with, for they do not exist at present. This would raise the cost of living here by the Customs Tax, and also incidentally by the protection which the new duties would give to our home production. Preferences here and in the Colonies thus mean absolutely different things. They are advantageous to the colonists, who buy more cheaply owing to the reduction in duties, by which they benefit. The situation in England would be reversed.
Foreigners and Preferences.
We have hitherto mainly considered preferences from their direct tendency to increase the cost of living in the United Kingdom, but there are other considerations which show their undesirability. Three-fourths of the import and export trade of the Mother Country is with foreign countries, and is to an immense extent carried on under the operation of the "most favoured clause" in commercial treaties. If we cease to be a Free Trade nation, is it to be supposed that Protectionist countries will extend the same favourable treatment to us? There is every probability, if not a certainty, that they would not do so. If this took place, not only would colonial preferences raise the cost of living here and the cost of production, but they would expose us to serious fiscal retaliation, and would further injure our export trade, which would be already jeopardised by the expense of manufacture being raised. Similar considerations apply, though in a smaller degree, to the self-governing Colonies. They have a large and growing trade with foreign countries, and this would be exposed to serious risks of retaliatory measures, such as those which have almost stopped the trade between Canada and Germany. This is the more important because our Empire already produces a good many commodities to a greater extent than its entire internal consumption, and there is a daily greater tendency in this direction. Among the articles already produced almost up to or beyond the requirements of inter-Imperial demands are: wool, tallow, hides, sheepskins, cheese, tin, tea, rice, jute, pepper, ginger, sago, indigo, palm and cocoanut oils, seeds and nuts, mahogany and teak, dye woods, some drugs, guttapercha, &c. These commodities would apparently be injured outside our market by our preferences, while they would not benefit within its borders. India is especially dependent on foreign countries, because the Empire cannot consume all its products. It is only certain articles that would benefit by preference, and it would pass the wit of man to draw up a tariff that would give equal advantages to the different States of the Empire. Under Preference the supplies of these goods would flow in a concentrated stream to Great Britain, and, with the increasing supplies, competition here would sooner or later deprive the colonists of any benefit that preferences might have given them at first. One curious result of preference would be to raise the cost of living in the Colonies themselves. If a price beyond what is current elsewhere were established, say, for wheat, colonial growers would expect, and get, the same price at home, thus raising the cost of bread. The surplus produce of wheat would all come here to obtain the higher English price, so that another colony—South Africa, for instance—which imports wheat would have to choose between buying in British Colonies at a higher price or in outside markets at a lower one. Of course, it would choose the latter—a strange result of Preference.
In connection with possible retaliation by foreign countries, the great re-export trade of the Kingdom has to be remembered; our total re-exports in 1906 were over £85,000,000, of which nearly £76,000,000 went to foreign countries. A very large proportion of these goods originally came from British possessions, though the exact amount cannot be given, because the places of origin are not given by the Board of Trade for our re-exports. Nothing would be easier than for foreign countries to stop this trade, and this would inflict a direct injury upon our Colonies as well as on ourselves.
The general results of our figures show that colonial preferences would probably lead to a new charge of £100,000,000 a year on the British consumer, and without considering any further burdens on him through difficulties with foreigners. The summary statistics we have given, indeed, practically speak for themselves, and require little argument to enforce them. No one who studies them can believe that colonial preferences are practicable, and far less that they are desirable. We only wish that we could give the mass of details from which our tables have been built up, for they are even more convincing than the summaries, but they would occupy some ten pages of this paper, and would not be lively reading. We append, however, in a note, a list of the main articles on which colonial or imperial preferences would necessitate duties, ending, as we believe they would, in a general tariff on the whole of our imports, say, roundly, on 1,500 or 1,600 commodities.
We have not touched on the political or imperial objections to preferences, but their ultimate effect, in the opinion of most Free Traders, would be to shatter the Empire into fragments. We lost the United States through attempting to tax them. Let us take care that the Colonies do not reverse the process and lose the Mother Country through taxation, to say nothing of the inter-colonial jealousies and quarrels that a preferential tariff would lead to. We are a prosperous and happy family as we are. We have the ties of blood, of affection, of common objects and sympathies. We have an almost unimaginable future before us under the present system. Let us not sacrifice all this and descend to the attempt to make our connection one of cash and of huckstering. In our own families we do not try to see how much we can get out of each other, but our object is to promote our common welfare. The colonies do not wish to exploit the Mother Country, but in some extraordinary way they think we should benefit by raising the cost of living, in this old and already overburdened land. They imagine that the more speedy development of the Empire would repay us for any sacrifices we may make. The Empire is, however, developing quite fast enough without such artifices, and it would be in a sad plight indeed if the preponderating partner, the United Kingdom, were injured, or, as we believe, ruined, by that return to Protection which would clearly follow Colonial Preferences.