Chapter 43

The movement in favour of tariff reform initiated by Mr Chamberlain (_q.v._) in 1903 with the double object of giving a preference to colonial goods and of protecting imperial trade by the imposition in certain cases of retaliative duties on foreign goods, was a natural evolution of the imperialist idea, and of the fact that by this time the trade-statistics of the United Kingdom had proved that trade with the colonies was forming an increasingly large proportion of the whole. In spite of the defeat of the Unionist party in England in 1906, and the accession to power of a Liberal government opposed to anything which appeared to be inconsistent with free trade, the movement for colonial preference, based on tariff reform, continued to make headway in the United Kingdom, and was definitely adopted by the Unionist party. And at the Imperial Conference of 1907 it was advocated by all the colonial premiers, who could point to the progress made in their own states towards giving a tariff preference to British goods and to those of one another.

The question of self-government is closely associated with the question of self-support. Plenty of good land and the liberty to manage their own affairs were the causes assigned by Adam Smith for the marked prosperity of the British colonies towards the end of the 18th century. The same causes are still observed to produce the same effects, and it may be pointed out that, since the date of the latest of Adam Smith's writings, upwards of 6,000,000 sq. m. of virgin soil, rich with possibilities of agricultural, pastoral and mineral wealth, have been added to the empire. In the same period the white population has grown from about 12,000,000 to 53,000,000, and the developments of agricultural and industrial machinery have multiplied, almost beyond computation, the powers of productive labour.

It is scarcely possible within this article to deal with so widely varied a subject as that of the productions and industry of the [Sidenote: The imperial factor in industry and trade.] empire. For the purposes of a general statement, it is interesting to observe that concurrently with the acquisition of the vast continental areas during the 19th century, the progress of industrial science in application to means of transport and communication brought about a revolution of the most radical character in the accepted laws of economic development. Railways did away with the old law that the spread of civilization is necessarily governed by facilities for water carriage and is consequently confined to river valleys and sea-shores. Steam and electricity opened to industry the interior of continents previously regarded as unapproachable. The resources of these vast inland spaces which have lain untouched since history began became available to individual enterprise, and over a great portion of the earth's surface were brought within the possessions of the British empire. The production of raw material within the empire increased at a rate which can only be appreciated by a careful study of figures, and by a comparison of the total of these figures with the total figures of the world. The tropical and temperate possessions of the empire include every field of production which can be required for the use of man. There is no main staple of human food which is not grown; there is no material of textile industry which is not produced. The British empire gives occupation to more than one-third of the persons employed in mining and quarrying in the world. It may be interesting, as an indication of the relative position in this respect of the British empire to the world, to state that at present it produces one-third of the coal supply of the world, one-sixth of the wheat supply, and very nearly two-thirds of the gold supply. But while these figures may be taken as in themselves satisfactory, it is far more important to remember that as yet the potential resources of the new lands opened to enterprise have been barely conceived, and their wealth has been little more than scratched. Population as yet has been only very sparsely sprinkled over the surface of many of the areas most suitable for white settlement. In the wheat lands of Canada, the pastoral country of Australasia, and the mineral fields of South Africa and western Canada alone, the undeveloped resources are such as to ensure employment to the labour and satisfaction to the needs of at least as many millions as they now contain thousands of the British race. In respect of this promise of the future the position of the British empire is unique.

It is not too much to say that trade has been at once the most active cause of expansion and the most potent bond of union in the development of the empire. Trade with the tropical and settlement in the temperate regions of the world formed the basis upon which the foundations of the empire were laid. Trading companies founded most of the American and West Indian colonies; a trading company won India; a trading company colonized the north-western districts of Canada; commercial wars during the greater part of the 18th century established the British command of the sea, which rendered the settlement of Australasia possible. The same wars gave Great Britain South Africa, and chartered companies in the 19th century carried the British flag into the interior of the African continent from south and east and west. Trading companies developed Borneo and Fiji. The bonds of prosperous trade have kept the Australasian colonies within the empire. The protection of colonial commerce by the imperial navy is one of the strongest of material links which connect the crown with the outlying possessions of the empire.

The trade of the empire, like the other developments of imperial public life, has been profoundly influenced by the variety of [Sidenote: Imperial trade policy.] local conditions under which it has flourished. In the early settlement of the North American colonies their trade was left practically free; but by the famous Navigation Act of 1660 the importation and exportation of goods from British colonies were restricted to British ships, of which the master and three-fourths of the mariners were English. This act, of which the intention was to encourage British shipping and to keep the monopoly of British colonial trade for the benefit of British merchants, was followed by many others of a similar nature up to the time of the repeal of the Corn Laws in 1846 and the introduction of free trade into Great Britain. The Navigation Acts were repealed in 1849. Thus for very nearly two hundred years British trade was subject to restrictions, of which the avowed intention was to curtail the commercial intercourse of the empire with the world. During this period the commercial or mercantile system, of which the fallacies were exposed by the economists of the latter half of the 18th century, continued to govern the principles of British trade. Under this system monopolies were common, and among them few were more important than that of the East India Company. In 1813 the trade of India was, however, thrown open to competition, and in 1846, after the introduction of free trade at home, the principal British colonies which had not yet at that date received the grant of responsible government were specially empowered to abolish differential duties upon foreign trade. A first result of the commercial emancipation of the [v.04 p.0613] colonies was the not altogether unnatural rise in the manufacturing centres of the political school known as the Manchester school, which was disposed to question the value to Great Britain of the retention of colonies which were no longer bound to give her the monopoly of their commercial markets. An equally natural desire on the part of the larger colonies to profit by the opportunity which was opened to them of establishing local manufactures of their own, combined with the convenience in new countries of using the customs as an instrument of taxation, led to something like a reciprocal feeling of resentment, and there followed a period during which the policy of Great Britain was to show no consideration for colonial trade, and the policy of the principal colonies was to impose heavy duties upon British trade. By a gradual process of better understanding, largely helped by the development of means of communication, the antagonistic extreme was abandoned, and a tendency towards a system of preferential duties within the empire displayed itself.

At the Colonial Conference held in London in 1887 a proposal was formally submitted by the South [Sidenote: Colonial preference.] African delegate for the establishment within the empire of a preferential system, imposing a duty of 2% upon all foreign goods, the proceeds to be directed to the maintenance of the imperial navy. To this end it was requested that certain treaties with foreign nations which imposed restrictions on the trade of various parts of the empire with each other should be denounced. Some years later, a strong feeling having been manifested in England against any foreign engagement standing in the way of new domestic trade arrangements between a colony and the mother-country, the German and Belgian treaties in question were denounced (1897). Meanwhile, simultaneously with the movement in favour of reciprocal fiscal advantages to be granted within the empire by the many local governments to each other, there was a growth of the perception that an increase of the foreign trade of Great Britain, carried on chiefly in manufactured goods, was accompanied by a corresponding enlargement of the home markets for colonial raw material, and consequently that injury to the foreign trade of Great Britain, while as yet it so largely outweighed the trade between the United Kingdom and the colonies, must necessarily react upon the colonies. This view was definitely expressed at the Colonial Conference at Ottawa in 1894, and was one of the factors which led to the relinquishment of the demand that in return for colonial concessions there should be an imposition on the part of Great Britain of a differential duty upon foreign goods. Canada was the first important British colony to give substantial expression to the new imperial sentiment in commercial matters by the introduction in 1897 of an imperial tariff, granting without any reciprocal advantage a deduction of 25% upon customs duties imposed upon British goods. The same advantage was offered to all British colonies trading with her upon equal terms. In later years the South African states, Australia and New Zealand also granted preferential treatment to British goods. Meanwhile in Great Britain the system of free imports, regarded as "free trade" (though only one-sided free trade), had become the established policy, customs duties being only imposed for purposes of revenue on a few selected articles, and about half the national income was derived from customs and excise. In most of the colonies customs form of necessity one of the important sources of revenue. It is, however, worthy of remark that in the self-governing colonies, even those which are avowedly protectionist, a smaller proportion of the public revenue was derived from customs and excise than was derived from these sources in the United Kingdom. The proportion in Australasia before federation was about one quarter. In Canada it is more difficult to estimate it, as customs and excise form the principal provision made for federal finance, and note must therefore be taken of the separate sources of revenue in the provinces. With these reservations it will still be seen that customs, or, in other words, a tax upon the movements of trade, forms one of the chief sources of imperial revenue.

The development of steam shipping and electricity gave to the movements of trade a stimulus no less remarkable than that given by the introduction of railroads and industrial machinery to production and manufactures. Whereas at the beginning of the 19th century the journey to Australia occupied eight months, and business communications between Sydney and London could not receive answers within the year, at the beginning of the 20th century the journey could be accomplished in thirty-one days, and telegraphic despatches enabled the most important business to be transacted within twenty-four hours. For one cargo carried in the year at the beginning of the 19th century at least six could now be carried by the same ship, and from the point of view of trade the difference of a venture which realizes its profits in two months, as compared with one which occupied a whole year, does not need to be insisted on. The increased rapidity of the voyage and the power of daily communication by telegraph with the most distant markets have introduced a wholly new element into the national trade of the empire, and commercial intercourse between the southern and the northern hemispheres has received a development from the natural alternation of the seasons, of which until quite recent years the value was not even conceived. Fruit, eggs, butter, meat, poultry and other perishable commodities pass in daily increasing quantities between the northern and the southern hemispheres with an alternate flow which contributes to raise in no inconsiderable degree the volume of profitable trade. Thus the butter season of Australasia is from October to March, while the butter season of Ireland and northern Europe is from March to October. In three years after the introduction of ice-chambers into the steamers of the great shipping lines, Victoria and New South Wales built up a yearly butter trade of £1,000,000 with Great Britain without seriously affecting the Irish and Danish markets whence the summer supply is drawn. These facilities, combined with the enormous additions made to the public stock of land and labour, contributed to raise the volume of trade of the empire from a total of less than £100,000,000 in the year 1800 to a total of nearly £1,500,000,000 in 1900. The declared volume of British exports to all parts of the world in 1800 was £38,120,120, and the value of British imports from all parts of the world was £30,570,605; total, £68,690,725. As in those days the colonies were not allowed to trade with any other country this must be taken as representing imperial trade. The exact figures of the trade of India, the colonies, and the United Kingdom for 1900 were: imports, £809,178,209; exports, £657,899,363; total, £1,467,077,572.

A question of sovereign importance to the continued existence of the empire is the question of defence. A country of which [Sidenote: Imperial defence.] the main thoroughfares are the oceans of the world demands in the first instance a strong navy. It has of late years been accepted as a fundamental axiom of defence that the British navy should exceed in strength any reasonable combination of foreign navies which could be brought against it, the accepted formula being the "two-power standard," _i.e._ a 10% margin over the joint strength of the two next powers. The expense of maintaining such a floating armament must be colossal, and until within the decade 1890-1900 it was borne exclusively by the taxpayers of the United Kingdom. As the benefits of united empire have become more consciously appreciated in the colonies, and the value of the fleet as an insurance for British commerce has been recognized, a desire has manifested itself on the part of the self-governing colonies to contribute towards the formation of a truly imperial navy. In 1895 the Australasian colonies voted a subsidy of £126,000 per annum for the maintenance of an Australasian squadron, and in 1897 the Cape Colony also offered a contribution of £30,000 a year to be used at the discretion of the imperial government for naval purposes. The Australian contribution was in 1902 increased to £240,000, and that of the Cape to £50,000, while Natal voted £35,000 a year and Newfoundland £3000. But apart from these comparatively slight contributions, and the local up-keep of colonial fortifications,--and the beginning in 1908-1909 of an Australian torpedo-boat flotilla provided by the Commonwealth,--the whole cost of the imperial navy, on which ultimately the security of the empire rested, remained to be [v.04 p.0614] borne by the taxpayers in the British islands. The extent of this burden was emphasized in 1909 by the revelations as to the increase of the German (and the allied Austrian) fleet. At this crisis in the history of the two-power standard a wave of enthusiasm started in the colonies, resulting in the offer of "Dreadnoughts" from New Zealand and elsewhere; and the British government called an Imperial Conference to consider the whole question afresh.