IN matters of fiscal policy the British Empire at present occupies a position peculiar among all the nations of the world, in that for nearly half a century it has been without any fiscal system common to its various parts. Nor does the fact seem to have seriously affected the sense of unity. It cannot be said that New South Wales, which till quite lately has in its fiscal arrangements followed the example of the mother-country, is united a whit more closely to her than is Victoria or Canada, where duties have long been imposed not merely for revenue but for protection. 'Nor can it be truly said that the ties, practical or sentimental, which bind together Canada and the United Kingdom, have grown weaker since the adoption in the Dominion of a trade policy opposite to that of the mother-land. Should the new commonwealth of Australia, in its eager desire to create varied industries, decide upon a system of inter-colonial free trade, with protection against the rest of the world, including Britain, no one would now anticipate therefrom any fundamental change {279} in the political relations between mother-land and colony.
Compared with all other nations, these conditions seem extremely anomalous. They are accounted for by the fact that the Empire itself is in its composition anomalous. In it we find communities existing under widely different conditions, some with vast populations concentrated in a small space, while others have their inhabitants thinly scattered over immense areas; some with wealth which lends itself readily to direct taxation, others which can only collect revenue easily at the ports; some chiefly engaged in manufacture, others in the production of food and raw material; some with capital and cheap labour in such abundance that they can cheerfully face any competitors, others under severe pressure from the competition of commercially hostile neighbours more rich and numerous than themselves. Economic theories are, in fact, being tested throughout the Empire under almost every conceivable condition, to the ultimate advantage, we may hope, of economic truth. Meanwhile, though no serious jar in the national system has as yet been caused by the divergence of trade policies, this divergence is looked upon by many as an almost insuperable obstacle to any closer political union. It is urged that a real national unity cannot exist without community of fiscal system, and in support of this position appeal is made to the examples of the United States, Germany, Austro-Hungary, Switzerland and Canada. In all of these {280} free internal trade followed upon the formation of a Federal system.
How, it is often said in England, can we unite more closely with countries which in trade matters are almost as hostile to us as France, Germany, or the United States? How, it is said in the colonies, can we unite more closely with a mother-land which in trade matters makes no distinction between her greatest enemy and ourselves?
Of late, as the pressure of hostile tariffs in foreign countries has been more severely felt, the tone of reproach is more distinct in England than in the colonies.
The slightest historical retrospect shows that this is not justified. The system by which each self-governing division of the Empire regulates its trade policy in accord with what it conceives to be its own interests, treating other parts of the Empire exactly as it does foreigners was not initiated by colonists, but by the people of the United Kingdom, in connection with the adoption of Free Trade in 1846. Previous to that period mutually beneficial trade relations, both as regards exports and imports, existed between the mother-land and the colonies. Many of the colonies, and especially Canada, protested vehemently against this change of national policy and suffered severely from the complete reversal of the trade relations which had previously existed. Given almost ostentatiously to understand that the mother-land was indifferent to the trade {281} policy which they pursued, the colonies were free, without any reproach on their national allegiance, to choose the system which seemed best adapted to their wants. On the one side they saw the United Kingdom wonderfully prosperous under Free Trade. On the other they saw the United States sweeping along in an equally wonderful career of prosperity under a system of Protection. The conditions prevailing in the United States seemed, of the two, more similar to their own, and it cannot be doubted that this example has had much to do with the adoption of Protective systems in most of the colonies. The wisdom or error of the choice remains to be demonstrated, for clearly all systems of Protection are yet on their trial. Are they expedients to accomplish a temporary purpose, or are they permanent policies?
Even in the United States there have been elections which indicated a distinct wavering of the public mind upon the question. In Canada the party which favours Free Trade is neither small nor unimportant. In Australia one of the chief objects aimed at in Federation is the freedom of inter-colonial trade which will be one of its conditions. Protection against the outside world will at first probably be another, but Sir Henry Parkes and other supporters of Federation have expressed the most confident belief in the ultimate prevalence of Free Trade principles over the Australian continent. He would be a bold prophet who would undertake to say whether Protection or {282} Free Trade would ten years hence be the policy of the United States, Canada or Australia, strong as is the hold which the former now has in each.
On the other hand, there is a prevalent opinion in Canada, and in other colonies as well, that the United Kingdom will yet be driven to recede to some extent from her Free Trade position. It is observed that however correct may be the economic principles on which Free Trade is based, national passion has prevailed over economic truth, and most of the nations of the world continue to erect higher and higher barriers against the trade of the United Kingdom, thereby falsifying the forecasts of the early apostles of Free Trade. More than this, it is seen that the United States, while given free access to English markets, not only creates a McKinley tariff to keep out English goods, but by offering Free Trade to Canada at the price of discrimination against Britain, practically, though perhaps not intentionally, uses the trade question as a leverage to break up the Empire. It is believed that, under the influence of considerations such as these, a decided reaction has in Britain begun in the direction of some modified system of Protection within the Empire.
Are there grounds to justify this opinion?
Certain it is that many Members of Parliament, representing both rural and manufacturing constituencies, openly avow their preference for a discriminating tariff within the Empire, and for fighting the commercial hostility of other nations by the use of similar {283} weapons, and appear to lose no political strength by the avowal. Twice has the Convention of Conservative delegates broken away from its leaders, and passed what amounted to Fair Trade resolutions. Liberal and Conservative representatives of labour constituencies have alike affirmed of late years that they find the working man's mind permeated with Fair Trade ideas, ideas which might become a serious political force in any period of prolonged industrial depression. A mayor of the greatest of English manufacturing towns told me in the very home of Free Trade that in his opinion England might yet have to revise her commercial policy. The leading silk-manufacturer of Yorkshire is an ardent advocate of Fair Trade principles. The heads of different great woollen and other manufacturing firms in the same county have told me that their judgment inclined them in the same direction. Joseph Cowen, the distinguished representative of northern Radicalism has said, that he looked upon a British Zollverein as the true ideal of our national statesmanship. When Sir Charles Tupper urged upon the late W. E. Forster the advisability of giving the outlying parts of the Empire a better commercial footing than foreign countries, his reply was: 'Well, I am a free trader, but I am not so fanatical a free trader that I would not be willing to adopt such a policy as that for the great and important object of binding this Empire together.'
The Times, commenting upon a speech of Sir {284} Gordon Sprigg advocating a commercial union between England and her colonies, said:—