PREFERENTIAL DUTIES IN THE PAST.
[TO THE EDITOR OF THE " SPECTATOR:1
SIR,-Mr. Chamberlain's agitation began on purely Im- perialist lines ; it then passed through an almost entirely Protectionist phase, when the Colonial part of the scheme was relegated to perorations ; we now see an attempt being made to revive interest in the preferential proposals, recent by-elections having given some cause to doubt whether simple Protection is quite so popular a cry as it was hoped it would be. The natural, nay, inevitable, conse- quence of this is the presence at political gatherings of the official representatives of our Colonies. Those who have studied the newspaper reports will have seen that Colonial officials accredited to this country are taking sides for and against Mr. Chamberlain's proposals, as Colonial politicians have been doing in their own countries. It is not easy to see how the encouragement thus being offered to gentlemen whose functions have hitherto been official, and not partisan, to take an active part in our home politics will conduce to the closer union of the Empire. This new departure increases the forebodings of those who foresee disruption as the inevitable outcome of Mr. Chamberlain's propaganda; and, moreover, the record of Colonial preference as it existed before the days
of Free-trade affords little encouragement for hoping that preference will consolidate the Empire.
The old preferential duties were the outcome of an attempt to build up a new Imperial connection after the collapse of the "Mercantile System" in the American War of Independence. This belief in a "self-sustaining" Empire which it is attempted to revive to-day was naturally much encouraged by the gigantic effort of Napoleon to exclude us from the Continental marka ; and, apart from other causes, the severe restrictions on Colonial trade with other countries made it imperative for us to provide our Colonies with a market in the Mother-country. By the Navigation Acts the import and export trade with our Colonies was confined entirely to British or Colonial built ships. Certain "enumerated articles," as they were called, were never allowed to be exported direct from our Colonies, but had always to be shipped here first, and no commodity produced on the European Continent was allowed to be shipped direct to the Colonies,—it had to be brought here first to be shipped in British-built and British- manned ships. We thus artificially raised prices in Colonial markets, and in return gave them an artificial command of our own,—a policy we are asked to renew without the excuse which existed a hundred years ago.
If we seek for the cause of the Little Englandism which was so prevalent in the middle of the last century, we shall find it in the artificial bonds which then united us to the Colonies, to the serious injury of the British consumer. The two most striking instances of this are to be seen in the Timber and Sugar Duties. Up to the first years of the nine- teenth century we drew all our supplies of timber from the North of Europe, but after our quarrel with the Northern Powers, and our seizure of the Danish Fleet in 1807, our statesmen became apprehensive that those supplies might fail. Mr. Vansittart, the Chancellor of the Exchequer, then hit on a plan worthy of Mr. Chamberlain. Foreseeing a possible shortage in the supply, he made it practically impossible to obtain North European timber at all. He almost entirely repealed duties on timber coming from our North American possessions and clapped an enormous duty on North European timbers. By this topsy-turvy economic policy, which has its counterpart to-day, he strove to prevent our suffering from foreign enmity, and to encourage Imperial interdependence. Of course, the timber was already in Canada, and we should have had as much as we wanted in a year or two in any case ; but the immediate result of the policy was that we were flooded for years with inferior timber from Canada, and the good cheap timber from the North of Europe was shut out, and we were compelled to use for building purposes wood particularly subject to dry-rot. There was still a demand for the Baltic timber, and it some- times paid to ship the wood from Northern Europe to Canada in order that it might come in here as American timber. But the general result was that in the "forties "of the last century, before the repeal of all preferential duties, the timber trade between- Canada and England was ten times that between England and Europe.
artificial stimulus, large vested interests grew up in Canada in connection with that trade. When the preference was withdrawn, first partially and then entirely, these interests not unnaturally raised piercing cries, for they were threatened with ruin, and their complaints found an echo in Lord Elgin's despatches and diaries. The sufferers threatened seces- sion and an agitation in favour of anneication to the United States. Canadian shipbuilders also suffered ; but the small farmers rejoiced, for they had resented the preference. Agri- culture had been neglected in the Colony for the benefit of a few great capitalists, who had also far greater capacity for bringing their grievances before the • British public. The British public itself, of course, refused to have its trade fettered any longer so soon as the trade restrictions on the Colonies had been repealed, which had been effected before the early "forties." Undoubtedly some Colonists suffered acutely in the collapse of an artificial system. Canadian millers also suffered, for the discriminating duty on Colonial flour allowed Americans to import their wheat into Canada, where it was ground up, and then exported to England as Canadian flour.
The collapse of this artificial system, in spite of the jeremiads
of the time, which are occasionally echoed to-day, had the happiest results for the Colony, which then entered upon her career of natural expansion. Her citizens were thrown on their own resources, and devoted themselves to the development of their splendid country in every direction. Partial attempts to maintain the old artificial arrangements would not have diminished Little Englandism ; they would have encouraged it. They would have given no satisfaction to the small farmers of Canada, who resented the timber monopoly, or to the timber monopolists, who wanted to retain it ; but the complete abolition of preference proved a blessing to Canada and this country alike. The proposed revival of preference is inevitably involving strife between manufacturers and agriculturists in Canada. The former are fairly quiescent at present, because they hope to bring their goods in here free from the general 10 per cent. duty threatened by Mr. Chamberlain. If they are not so exempted, preference is doomed in Canada ; and if they are, what will our manufacturers say ? In any case, the old story of Canadian preference threatens to be revived, with far more serious conse- quences than in the early days of Free-trade.
Recent attempts to revive the West Indian sugar industry by
artificial means recall the most striking instance of preferential folly. It had a far more injurious influence on our population than the timber preference, for, by creating artificial dearness for a necessity of life, it deprived the poorer classes of a highly desirable form of nutriment. Discrimination had not much effect so long as slavery endured, for nearly all the sugar we wanted was then produced in our own possessions ; but the importation from the West Indies fell from four million hundred- weight in 1831 to two and a half million in 1842. The duties on sugar, which had been in 1836 36s. a hundredweight on Colonial and 63s. on foreign, were regulated anew in that year, and stood at 14s. for Colonial brown sugar and 63s. for foreign sugar produced by slave labour, and 23s. 4d. when produced by non-slave labour. This distinction was really an absurdity. for we allowed other slave-made commodities to enter without any differential duty. Our consumers and manufacturers paid enormously for sugar to benefit the West Indies. The price of Brazilian and Cuban sugar in bond was just half that of British Colonial. In consequence the average loss to the British public was enormous ; and the Revenue lost also. The talk about slave- grown sugar was gross hypocrisy, for we did not hesitate to trade largely in it with the Continent. On the other hand, we had prevented the legitimate development of our West Indian Colonies by forbidding them to set up sugar-refineries to compete with our own refining trade, for which Mr. Chamberlain was lately so solicitous. Such anomalies always exist in a Protective system, which is founded on selfishness, in whatever grandiloquent phrases it may deck itself.
The attempt to foster the growth of Colonial coffee was another
preferential absurdity. The duty on foreign coffee was fixed in the " forties " at 6d., and on Colonial coffee at ad.; previously the discrimination had been as much as Is. 3d., while coffee imported from any British possession within the East India Company's Charter was only 9d. The result of this was that the coffee-producing foreigner shipped his coffee to the Cape (which was within the Charter), and it came in here at a 9d. duty. The importation of coffee from the Cape rose therefore from 189 lb. in 1830 to 6,149,489 lb. in 1842, when this roundabout smuggling was suppressed, and the low preference substituted, which ulti- mately disappeared altogether. The Colonial grower naturally raised a loud outcry ; but he had not controlled our market, thou& he had imported largely, while the consumer bought the coffee with the addition to the price of the higher duty.
Finally, the ease of the Cape wines merits attention, for we
are told that by the Chamberlain system Australian wine-growers are to benefit. During the Napoleonic War we thought it better to make the Empire" self-sustaining" in wine as in other things. By a proclamation of the Governor in 1811 the growth of wine at the Cape was greatly encouraged, and by an Act of 1813 Cape wine was admitted here at one-third the duty on Spanish and Portuguese wines. In ten years the produce rose from 860,000 to 2,250,000 gallons; and by 1846, when the duty on Cape wines was just half that on all foreign wines, the importation here was 365,867 gallons, to 409,506 gallons from. France. When differen- tial duties were abolished the importation of Cape wine fell, of course, to its natural level, and twenty years later Was only 25,000
gallons. This was the most ridiculous preference of all ; it only benefited the fraudulent wine merchant in Britain, for it supplied him with cheap trash wherewith to adulterate good foreign wine, and it did not really benefit the Cape wine-grower, for it did not encourage him to improve his methods of manufacture; it only gave him a safe market for a bad product.
These are a few examples of the results of preference under the old regime. Any one who wishes to grasp the causes of its ill effects upon Imperial feeling will do well to study the evidence given by Board of Trade officials and leading merchants before the Commission of 1840. It was on the Report of this Commission that Sir Robert Peel founded the great series of fiscal reforms which he inaugurated in 1842. We shall be told that preference to-day will not be the same thing as it was then. It will not; for, as the Duke of Devonshire has pointed out, it will partake rather of the nature of commercial treaties between independent States so far as our self-governing Colonies are concerned, leading away from, rather than towards, a closer Imperial connection. But preference to-day will lack the excuse it had in the past in the restraints we then imposed upon our Colonies, and will involve the additional folly of refusing to profit by our experience of its futility as a means towards a permanent Imperial union.