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ART. V.-COLONIAL PREFERENTIAL TARIFFS.

1. Imports into Canada. Return to an Order of the House of Lords, dated March 30, 1906. Ordered to be printed May 7, 1906.

2. Annual Statements of the Trade of the United Kingdom with Foreign Countries and British Possessions. Published in 1896, 1901, and 1906.

3. Statistical Abstract for the Several British Colonies, Possessions, and Protectorates in each year from 1891 to 1905. Forty-third number. 1906.

4. Colonial Import Duties, 1905. Return relating to the rate of import duties levied upon the principal and other articles imported into the British colonies, possessions, and protectorates. 1905.

5. The Customs Tariff (British Preference), 1906, Reserved Act. [Cd. 3339.]

WE E venture to assure the colonial representatives who are now assembled in London, that their presence is as warmly welcomed by those of us whose convictions lead us to criticize the proposals that some of them may bring forward as to a scheme of Imperial reciprocity, as it can possibly be by those whose views are in agreement with theirs. We believe that the maxim solvitur ambulando may fittingly be applied to these periodical discussions between the statesmen of the Empire, and we heartily thank our colonial ministers for undertaking such long oversea journeys for the purpose of threshing out questions which have as their aim the common welfare of all parts of his Majesty's widely-scattered realm. We trust, therefore, that such criticism as we are about to offer will be taken in good part, and that it may receive from our visitors, and those who agree with them, such consideration as we in turn are prepared to accord to any fresh proposals they may advance.

According to the agenda paper which Lord Elgin has caused to be drawn up, and which he despatched to the GovernorsGeneral of the Dominion of Canada, and of the Commonwealth of Australia (which includes Tasmania), and to the Governors of New Zealand, Cape Colony, Natal, the Transvaal, and Newfoundland, the five primary subjects for discussion at the Colonial Conference are (1) the constitution of future conferences; (2) preferential trade; (3) defence; (4) naturalisation; and (5) emigration.

With reference to the first subject it may be interesting to

show what proportion of the inhabitants of the British Empire are directly represented by ministers attending the present conference. The following table sets out this information, the figures being taken from the 'Statistical Abstract for the British 'Colonies, &c.' [Cd. 3253], published at the end of last year, unless otherwise stated.

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To June 30, 1906. See 'Statistical Abstract for the United Kingdom, 1906.' [Cd. 3,092, p. 347.] † See p. 63 of [Cd. 3,092] Statistical Abstract for the United Kingdom.' Estimated on June 30, 1905.

§ Estimated, 1904. See 'Statistical Abstract for British Empire,' No. 2, p. 1. Including the value of diamonds and raw gold (the produce of South African colonies) brought overland for shipment, but excluding exports overland.

The second head of discussion, 'preferential trade,' will probably commence with a consideration of the Canadian Preferential Tariff.

CANADIAN PREFERENTIAL TARIFF.

A year ago Lord Ridley, chairman of the Tariff Reform League, and late Under-Secretary for the Colonies in Mr. Balfour's Government, moved in the House of Lords for a 'Return show'ing the imports of merchandise into Canada from the United 'Kingdom, the United States of America, Germany, and other 'countries respectively, distinguishing "dutiable" and "free" ' goods, from 1890 to 1904.' In the autumn of last year, when the return had been published, his lordship stated at a public meeting held in Putney that the Liberal party would be forced at the colonial conference to recognise that the Empire was composed, not of one free democracy but of many free democracies, of which only one, and that only temporarily, had pronounced against the principle of preferential treatment. These views have been echoed and emphasised by his supporters, and it cannot be denied that they are honestly held by a good many people, both here and in the colonies. It has become therefore not only courteous but necessary to consider what

justification can be found for opinions so enthusiastically upheld by tariff reformers and by many others who are far removed from the standpoint of protectionists.

Lord Ridley's 'Return'* enables us to show what has been the result of the preferential treatment of the United Kingdom by Canada; and if the results of the 'preference' are seen to be somewhat barren and disappointing, the stand taken by free traders will be correspondingly justified, and it will be reasonable to hope that sentiment notwithstanding-the assault promised by the tariff reformers and their colonial allies upon the fiscal policy of the United Kingdom may be effectively repulsed.

What, then, is the 'preference' given by Canada to the United Kingdom? Simply this: that on August 1, 1898, what is known as the British preferential tariff came into force, whereby goods (except alcoholic liquors, tobacco, and in certain cases sugar), the produce or manufacture of the United Kingdom and certain British possessions, when imported direct, were entitled to a reduction of one-fourth of the duty to June 30, 1900, and to a reduction of one-third of the duty from July 1, 1900.† But, as the Canadian import duties mainly range from 10 per cent. ad valorem to 35 per cent. ad valorem, and the majority of goods imported are taxed at the higher rates (see Parliamentary Return of Colonial Import Duties [Cd. 2627]), it is evident that the reduction of the duties allowed to the United Kingdom still leaves her goods liable to the payment of duties of from about 6 per cent. ad valorem to about 24 per cent. ad valorem. In addition, therefore, to the cost of transit across the Atlantic, and insurance, there remain heavy import duties that work to the detriment of British manufacturers, and it is *Imports into Canada, White Paper, No. 71, published in May, 1906.

† See p. 211 (footnote) of the 'Statistical Abstract for the British Colonies, &c.,' No. 43, 1906. [Cd. 3253.]

It is well to be explicit on this point, as it is not always clearly understood. On p. 239 of The Causes of Decay in a British In'dustry' (Longmans, 1907), the authors have committed a strange mistake in writing of the preference.' They say: The American 'general tariff is now lower than the Canadian preferential tariff, and unfinished goods, such as component parts, can be obtained 'from Belgium at a very low price and are subject to 25 per cent. duty only. The English manufacturer has preference only to this 'extent; on a shipment value 1007. the duty is 30l., less one-third of 30 per cent. on the 301.: that is to say, 10 per cent. of 301., which equals 31., leaving the duty on 100l. at 271.' The italics are ours.Reviewer.

scarcely matter for surprise to find that the contiguity of the United States enables her citizens to beat the manufacturers of the United Kingdom in the competition to supply goods to the Dominion.

The following table shows the values of the imports of dutiable goods into Canada from the United Kingdom, in periods of four years from 1890-1 to 1905-6, the figures (in thousands of pounds) being those given in Lord Ridley's 'Return.'

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From the above table it is seen that the minimum value, 4,156,000l., was recorded in 1896-7, and that the values have risen each year since, although the increase in 1900-1 was only 28,000l., and in 1904-5 was 34,000l. The value in 1905-6, 10,958,000l., being for the year ending on June 30, 1906, has, of course, been obtained since Lord Ridley's 'Return was published.

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The following table shows the corresponding values of the imports of dutiable goods into Canada from the United States.

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This table shows that the minimum value of the period was recorded in 1894-5, viz.: 5,303,000l., and that the values have risen each year, except in 1900-1, when there was a decrease of 61,000l. upon the value of the previous year.

From the first table it can be seen that the increase in the value of the dutiable imports from the United Kingdom, during

the nine years that have passed since the year of minimum value (1896-7), has been 6,802,000l.

During the same period of nine years, the increase in the value of the dutiable imports from the United States has been 12,388,000l., as can be seen from the second table, a sum but little short of twice the value of the increase of the imports taken from the United Kingdom. For the last eight years ' preference' has been granted to the imports of British goods, and for the last six years this 'preference' has amounted to a reduction of one-third of the import duties charged, yet notwithstanding this advantage the British manufacturers have only sent goods valued at six and four-fifths millions more than in 1896-7, while the United States have sent in goods that have risen in value by twelve and two-fifths millions.

We do not dispute that the 'preference' shown to the United Kingdom has benefited to some extent her manufacturers, but it has also benefited the Canadian consumers who have purchased the British goods at a price reduced by the amount of the ' preference.'

The following chart, showing the average annual values (during periods of four years given in the above tables) of the dutiable imports into Canada from the United Kingdom and from the United States-enables one to see at a glance how much more rapidly the imports taken from the United States have risen than have those taken from the United Kingdom.

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The chart shows that the average annual value of the imports taken by Canada from the United Kingdom during the period from 1890-1 to 1893-4 was just over six million pounds, viz. :

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