debt incurred in its development. This idea is in full accord with the first principles both of taxation and expenditure.

The first great rule of taxation is that the subjects of every state ought to contribute towards the support of the government as nearly as possible in proportion to their respective abilities, that is in proportion to the revenue which they respectively enjoy under the protection of the State. The subjects are compared to the joint tenants of a great estate— liable to a share in all the expenses of upkeep and acquisition.

Similarly the first claim on the revenue so raised is for the expense of defence. "The first duty of the sovereign, that of protecting the society from the violence and invasion of other independent societies, can be performed only by means of a military force.'

The second of Adam Smith's leading ideas is that in return for, or in connection with, this contribution to the imperial revenue, the subjects of the provinces ought to have a share in the control of expenditure. Such control can only be exercised by some method of representation. The want of such representation was the cause of the ruin of the Roman organisation, whilst the development of representation in proportion to taxation is essential to the growth of the British Constitution.

The third leading idea is that the government of a great empire has other duties to perform besides providing for the protection and advancement of comMercantile profit is not always the measure

merce.

are opposed.

of national advantage; in some important cases they The state is a bad trader; and the traders are bad statesmen, especially in the treatment of subject races.

The fourth idea is that the mother country cannot meet the expenses of empire from the indirect profit obtained from a monopoly of the trade of the colonies and dependencies.

It will be seen that of these fundamental ideas two are positive: the subjects must pay taxes and the taxpayers must be represented; two are negative; the state is not a business run for profit, and the state cannot get its revenue by the monopoly of trade.

Incidentally Adam Smith considers the alternative policy to this scheme for imperial federation; what may be called the method of friendly disintegration. Under this plan the parts of the empire would separate in a friendly manner with treaties of commerce mutually advantageous, each separate nation now providing for its own defence and administration. This method is rejected by Adam Smith as opposed to the fundamental sentiments at the root of nationality. The possibility is shown in our own times by the political severance of Norway and Sweden; but there can be no question that since the time of Adam Smith the tendency has been to an increasing extent towards closer amalgamation of loosely connected States; and great wars have been undertaken to prevent disintegration-witness the civil wars in the United States of America and in South Africa.

CHAPTER XV

BRITISH COLONIAL POLICY SINCE ADAM SMITH

§ 1. Different Ideas of Colonial Policy.

THE separation of the thirteen American states from the mother country, and the recognition of their Independence, naturally led to a change in British colonial policy. In the brief survey attempted in this chapter, an effort will be made to indicate the leading ideas that have brought about the present situation. To begin with, the fear of losing other colonies, especially Canada, led the Government to try to keep the colonies more under control as regards the management of their internal affairs. This was the first idea-more management, and more careful management. It was believed that the chief cause of the revolt of the thirteen states had been the growth of the sentiment of independence in consequence of the absence of effectual home control.

The second idea was that the individual colonies were to be carefully watched, and in some cases to be isolated, and weakened politically, so as to prevent any dangerous federation. Pitt, for example, in introducing the Quebec Bill of 1791, said that the

object was to create two colonies in Canada, separate and jealous of each other, so as to guard against the repetition of the American example in which the thirteen colonies had, or thought they had, the same interests. Both of these ideas have not only been abandoned but reversed; devolution and federation have ousted altogether the ideas of management and jealousy. The history of the change is instructive.

In order to carry out this policy of internal control, various officials had to be appointed directly by the Colonial Office (which in 1794 had been revived for the purpose); great abuses naturally sprang up in the patronage; and the colonies were shamelessly exploited for the benefit of place-hunters in the home country. In the Crown colonies the dominion of the Crown (i.e. of its advisers) was absolute, and the authority of the Colonial Office was exercised directly by instructions to the governors. The management from Downing Street aimed at omniscience and omnipresence. In the free colonies the home control was exercised for the most part indirectly through the influence of the governors and their councils.

Self-government was there in theory; but in practice the governors, aided by dominant interests in the colonies, contrived to govern according to the policy dictated from Downing Street."1

1 Erskine May's Constitutional History of England, vol. iii. chap. xvii. p. 361. Ibid. for the abuses connected with patronage.

§ 2. Growth of Self-Government-Preferential

Duties.

The irritation caused by these abuses of management from from Downing Street, naturally led the colonists to demand, and the progressive party in England to support, an extension of self-government.

With successive grants of self-government, by way of counteracting the tendency to independence an endeavour was made to bind the colonies by commercial ties. Mindful of the evil results of the restrictions imposed under the old monopoly, attention was directed to the development of the old system of bounties and preferential duties on exports of colonial produce to this country. Intercolonial trade was also managed from the same point of view-namely, the commercial nexus as the bond of empire. The West Indies, for example, instead of being allowed to develop their natural trade with the United States, were compelled to take, at high prices, the produce of Canada, which sometimes could not give enough.1 But the bribe to Canada irritated the islands. The preferences given to the colonies in British markets were defended as a sort of compensation for the political restraints imposed.

Unfortunately, however, the people of this country began to realise or to imagine (which in politics has often the same result) that the colonial preferences imposed burdens solely on them, and gave benefits

2

1 Davidson, Commercial Federation and Colonial Trade Policy, p. 11. 2 Davidson, p. 14 n. In 1840 it was calculated that England lost from £5,500,000 to £8,000,000 per annum by dearer goods, besides losing in the quality, notably in the case of timber.