the time of Hamilton to adopt protectionist duties. against Europe and especially against England, why should it not be equally advantageous for Canada which economically is at an early stage of development to adopt a similar policy?

It must again be pointed out that at present the question is not as to the complete abandonment of differential duties, but only of such as fall on British goods. The case of imperial protection against the world is considered later on.

With this proviso it will be apparent to any reader of Hamilton's report that his great arguments do not apply to the case of Canada and the United Kingdom; and Canada is only taken as representative of all the protectionist colonies.

The opening sentence of Hamilton's Report on Manufactures states that his attention had been directed "particularly to the means of promoting such manufactures as will tend to render the United States independent on foreign nations for military and other essential supplies." Amongst these essential supplies are all kinds of manufactures ; and he goes on to show, in the first place, that the markets of Europe were not regularly open to the agricultural products of the States; and accordingly there was a difficulty in obtaining the corresponding imports from Europe when barriers were imposed on the exports from the States. It is obvious that if Canada is regarded politically and economically as part of the British empire, military dependence on the mother country for supplies is totally different

from dependence on foreign nations; and the markets of England are, and have been for years, open to colonial products.

Hamilton's second argument is that it was desirable to foster manufactures in the states so as to give an encouragement to agriculture. Here again there can be little doubt that the agricultural interests of Canada (and other colonies) are prejudiced by the protectionist duties imposed against British manufactures.

Thirdly, there is the argument that for a new country it is necessary to promote artificially the growth of towns and cities in order to obtain a variety of industries and other social advantages. This argument may be answered by reference to the development of the United States. Internal free trade over these vast territories, even before the recent development of the means of transport, did not prevent the growth of cities in the newest and most distant States; towns and cities were not confined to the old Eastern states, nor were the newer states devoted entirely to agriculture. And in the same way it may be supposed that the growth of towns and cities in the British dominions would not be prejudiced by internal free trade. One of the best founded inductions of commercial geography is that the growth of towns and cities depends mainly not on manufactures but on trade.

Let the statesman of any self-governing dominion consider the question from the point of view, not of particular manufactures, but from that of the whole

industry of his dominion, and, even with this narrow view of colonial interests in which no regard is paid to the rest of the empire, he will discover that free trade with the United Kingdom is an object worth striving for; because the gain to agriculture and the gain to trade would more than compensate the temporary loss from the partial decline of certain protected manufactures.

But the question must be regarded from a higher standpoint. Internal free trade means, indeed, in the first place only the breaking down of fiscal barriers and obstacles within the empire; but it is also a necessary preliminary to the full development of all kinds of improvements in the means of communication and transport (in Adam Smith's words, endorsed by Hamilton," the greatest of all improvements"), so that not only material goods, but men and ideas may be readily transferred from one part of the empire to another. Internal free trade, with the development in a multitude of forms of closer union between the different parts of the empire, is closely connected with imperial defence. Under modern conditions defence depends, in the last resort, more than ever on wealth and population, and we may add organisation. "In ancient times," observes Adam Smith at the conclusion of his remarkable chapter on the expense of defence," the opulent and civilised found it difficult to defend themselves against the poor and barbarous nations. In modern times the poor and barbarous find it difficult to defend themselves against the

1 Book v. chap. i. part i.

opulent and civilised. The invention of firearms, an invention which at first sight appears to be so pernicious, is certainly favourable to the permanency and extension of civilisation." And since Adam Smith wrote this argument has increased in force at an increasing rate; witness the expense of a single big gun, a single battleship, or a single railway for strategic purposes; or consider in gross the enormous military expenditure of every civilised state. If we wish to compare the real military power of modern nations, e.g. Russia, France, and Germany, we have to take account of their wealth and population, and also of the internal organisation by which this potential power of numbers and wealth may be brought to bear on military needs. If the colonies are in earnest in wishing to co-operate in making the defence of the empire absolutely secure, they must realise that in modern times national or imperial power is increased by everything that increases the numbers and wealth of the empire as a whole, and by everything that unites more closely the various parts.

Apart from the consideration of defence, there are other objects of political union which can be most effectively achieved on a large scale. The resources which are the ultimate reserves of military power are also the resources from which must be met the growing social needs of the community. The rise in the standard of life and the standard of comfort of the masses of the people is only possible with a continuous increase in the productive powers of the society. The most efficient cause of the prosperity of

new colonies, as shown by Adam Smith on a wide inductive survey, is the capital, living and dead, which they acquire from the old civilisations. If the United Kingdom has much to gain from the development of the natural resources of the colonies, the colonies have much to gain from the accumulations, material and immaterial, of the old country.

§. 8. Difficulties in the Establishment of Internal Free Trade-how met.

In the light of history it would be foolish to deny that the sudden abolition of all protective duties now imposed by the British dominions against British goods might be inconvenient to certain classes and industries and localities.

If, however, the real advantages of internal free trade are once appreciated by the statesmen and the people of the dominions, these difficulties are not insuperable.

The most formidable are not founded on facts but on opinions, and opinions may be changed. In the forefront there is the idea of impossibility; and so long as statesmen are content to repeat, one after the other, that a thing is impossible, it is ipso facto impossible. It will cease to be impossible as soon as it seizes the imagination of a great colonial leader of the order that believes in a thing because it is impossible. Every great success in war and in peace has been impossible until it has been accomplished. In the background there are the prejudices of the people; but though the race continues, the