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THE question of imperial defence has suddenly become of pressing importance, and has directed public attention to other aspects of imperial union. The object of the present book is to reconsider the economic problems involved in their due order and proportions.

And first of defence: So long as this country could maintain the undisputed command of the sea we could afford to wait in case of need for the aid of the overseas dominions. But recent events have shown that this country ought no longer to attempt to provide from its own resources for the naval defence of the whole empire; and in a great naval war there would be no time to call up the ultimate or potential reserves of men and money from the ends of the earth.

The self-governing colonies have grown into selfconscious nations, and the recent conference has shown that they recognise that the primary duty of every nation is to provide for its own defence against foreign attack.


This duty, however, may be performed in two different ways or according to two different ideals; which may be termed the national and the imperial. On the first plan each dominion or commonwealth, or state or nation, would look mainly to its own defence and to the trade routes in which it is most interested. The ultimate ideal would be effective national independence; and imperial defence would be resolved into a friendly alliance between the different nations.

On the second plan each constituent state would contribute to the defence of the whole empire according to some definite scheme; as, for example, by the assignment of certain revenues for imperial purposes, or by a payment in proportion to population, or by some combination of these methods, as in the case of the German empire, where imperial revenues are supplemented by the matricular contributions of the


On the first plan, if we look to the natural growth of the British empire, in the course of a century—a short period in the history of nations-there would probably be five de facto independent nations, connected only by nominal ties of sovereignty, and relying on conferences for the exchange of ideas and the acceptance of informal agreements. In such a scheme India, the Crown colonies, the protectorates, and other "appendages" would be considered as special" possessions" of the United Kingdom which would alone bear, as at present, the supplementary

costs of defence and administration. In the course of time some of these possessions might become de facto independent, or be transferred to an adjacent "colony."

On the second plan there would be a union as real as that of the constituent parts of the United States or the German empire. In this scheme the " appendages" would be de facto possessions, not of the United Kingdom but of the British empire.

It is obvious that a real imperial union of this kind would involve the institution of some form of federal government, in which the constituent states were represented. It is beyond the range of the present inquiry to consider the political difficulties involved. It is clear, however, that a real federal government of this kind, although established in the first place for defence, would naturally be used for the furtherance of other objects. Of these secondary objects of political union the most closely connected with defence is the growth of wealth, population, and organisation. And for this economic development a common defensive policy would naturally be supplemented by a common policy, both as regards trade within the empire, and also as regards commercial relations with foreign states; and in both cases the ruling idea would be the economic development of the empire as a whole.

For this further development free trade within the empire seems to be one of the fundamental require

ments; especially if the appeal is made to recent experience in empire-making. Internal free trade (i.e. between the constituent parts of the empire) is consistent either with external protection of the most extreme kind or with the complete absence of differential duties or with any via media. In the United Kingdom, for example, free trade between England, Scotland, and Ireland was established whilst the home market was protected against the foreigner by high duties and absolute prohibitions"; and no one doubts that for the United Kingdom as a whole, this internal free trade has been most advantageous.

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On this point the history of the United States of America is also most instructive. The thirteen states united to gain their independence; and for six years after the independence was gained they celebrated their freedom by insisting each for itself on its own sovereign power in making commercial treaties and sometimes against one imposing customs duties another. The Constitution of 1789 vested this power in the federal government; the thirteen commercial "nations" became one commercial "nation"; and with the accession of new states this internal free trade has been extended over vast territories.1

Internal free trade within the empire would be accompanied naturally, though not necessarily, by the acceptance of common principles and common action in foreign commercial relations. From the

1 See below, Chapter XVI.

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