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In sewing-machines and machinery, except steam-engines and in tinplates, there was a large increased export in 1902; smaller increase in paper, and wool flocks, and nails; a diminishing increase in silk manufactures.
Mr. D. A. Thomas in his paper above referred to sums up his conclusions, "Whatever may be the cause there has been a very serious check to the expansion of foreign demand for British produce during the past ten years, and there is ground for something more than a suspicion that our exports other than coal, both in respect of value and quantity, have become at least for the time being stationary, if not retrogressive."
It is at the same time to be noted, although we cannot enter upon these topics, that the action of trade unions, especially in limiting the work to be done by individual workmen, and strikes leading to importations from abroad, have placed British production at a serious disadvantage in comparison with that of foreign countries.
"The increase of population in Germany and the United States, has recently been greater than the increase in the United Kingdom, and those countries have rapidly developed manufacturing and industrial power. As with ourselves, so with those countries, the set of population has been to the towns; necessarily, therefore, there has been a more vigorous search than formerly for an outlet for the power above referred to. We are still ahead of either country in our power of manufacture for export, but beginning from a lower level, each country is travelling upwards more rapidly than we are who occupy a higher eminence. If peace is maintained, both Germany and the United States are certain to increase their rate of upward movement. Their competition with us in neutral markets, and even in our home markets, will probably, unless we ourselves are active, become increasingly serious. Every year will add to their acquired capital and skill, and they will have larger and larger additions to their population to draw upon. It is necessary, therefore, more than ever, that the change of conditions should be recognised, and we can scarcely expect to maintain our past undoubted pre-eminence, at any rate, without strenuous efforts
and careful and energetic improvement in method. The problem, how best this can be done, is of vital interest to all classes of the industrial and commercial community alike, though the assistance which the State can give in the matter must necessarily be of a limited character."
EXCESS OF IMPORTS.
The excess of imports into the United Kingdom which, in the decennial period 1893-1902, has amounted to an average of £161,000,000, has to be considered in connection with the industrial position of the country, more especially as it has given rise to apprehension in some quarters. The question is, are we paying for these imports by means of current industry, or out of accumulated capital? The income tax returns show that there is no apparent inroad upon accumulated capital. The statistical abstract published by the Board of Trade shows that imports exceed exports on all European countries except Austria-Hungary, Greece, Italy and Turkey.
Exports also exceed imports in the case of China, Japan, Morocco, Persia, Mexico, and several American republics. In itself the fact need not be unfavourable, provided that the excess of imports can be attributed to legitimate earnings. In considering this part of the subject, it is to be remembered that certain charges, falling on imports and exports alike, have in the one case to be substracted from and in the other to be added to the official values. This point has been well treated by the late Mr. Newmarch and by Sir Robert Giffen, in papers read before the Royal Statistical Society. It is a difficult and intricate question. The papers referred were read by Mr. Newmarch in 1878, and by Sir Robert Giffen in 1882 and 1876, and they may be studied with advantage. Owing to improvements in the official returns, the allowance to be made under this head is not so large as it was formerly, and the amount assigned is, of course, only an approximate sum. I have estimated it at £3,000,000. Proceeding next to another concealed addition to exports, an informant who possesses complete knowledge of the subject, has been good enough to examine the cost of the provisions and stores embarked on board the 50,000 vessels which leave annually the ports of the United Kingdom for ocean voyages; he is of opinion that the value of these goods may properly be reckoned at £10,000,000. Allowance must also be made for similar supplies to vessels
engaged in the home trade, say, £2,000,000 on this account. Then vessels of war also take out of the country armaments, stores and provisions. Part of the equipment which figures in the budget as military expenditure likewise goes out of the country. These items are in effect exports which do not appear in the trade returns. We cannot this evening examine these matters in detail; it would seem that at a moderate estimate the whole sum may be put down at £30,000,000.
In Blue Book No. 1761 it is stated, "The first great item which is omitted in our trade returns, and which has to be added to our exports, is on account of the earnings of our carrying trade," and after analysis of the circumstances an estimate is offered, "" a very rough one," which virtually coincides with Sir Robert Giffen's figures, making £89,500,000 the sum to be added to exports under this heading. Our revision of figures stand thus:
£30,000,000 exports unreckoned.
3,000,000 charges to be added.
89,500,000 earnings of carrying trade. £122,500,000
leaving 38 millions to be accounted for. The second great item in the Board of Trade review of the balance of imports and exports is income from foreign investments; the opinion is expressed that under this heading "we are justified in concluding that 52 millions is a minimum figure." The conclusion to be arrived at therefore on investigation is that our exports really exceed the imports; a result which explains the continued growth of the yield of the income tax. Yet there is an element of instability in such extensive investments abroad; so long as regular income is maintained the use of this wealth is secure, but there is an absence of control over these funds, and this growth of imports cannot be attributed entirely to sound trade-to some extent it is the outcome of unfair competition. In cheapening goods for consumption, gain is properly accomplished by aiding production, not by flooding markets with low-priced commodities by means of combinations and dumping transactions.
DUTIES AND PRICES.
In the present controversy, the point whether or not the consumer pays Customs duties is much discussed. The subject of prices, it is scarcely necessary to say, is very complex. Price depends upon certain regular conditions, and upon certain fluctuating causes. The
former comprise the cost of production, and the cost of placing an article on the markettariff charges form part of the cost of placing on the market. The fluctuating causes are demand and supply; speculation in the particular trade; the use made of business methods connected with each trade; and, in countries where the currency is chiefly paper, variations in the rate of exchange. Different opinions are expressed with regard to most economic questions, when considered with the abstract reasoning of the class room, or from experience acquired in the market. Each opinion may be correct from the standpoint taken. As a practical matter the two points of view need to be combined. Conditions of trade, and local circumstances, vary, and processes of manufacture alter, and therefore general propositions cannot be safely pressed far. Customs duties being fixed conditions, Lord Goschen is right (if I may venture to say so) in regarding a duty as being in a certain sense a charge on the consumer. In practice, however, when the rate of duty is low, dealers take the sum out of the profit accruing to them, under the fluctuating causes above indicated; and the duty is not really added in the payment made by the consumer-nor, on the other hand, does the consumer gain the full amount of a reduction of duty. Let us examine some instances bearing directly on this question, and take first the average price of wheat per quarter, and the average duty per quarter, during the years immediately before and after the repeal of the Corn Laws.
the repeal of the Corn Laws did not lower the price of bread shows that the popular argument of the big and little loaf is simply a popular delusion. The Blue Blook, No. 1761, shows similar discrepancies between theory and fact in connection with wheat prices and duties in France and Germany. The late is. duty on wheat in this country did not occasion an increase in the cost of bread; yet when it was taken off, the price rose in some localities. The increase of duty on wine in bottle in 1888 had partial and not general effects.
It appears further from a recent report in the Diplomatic and Consular series that the German dealer, and not the consumer in Germany, has paid the export duty on English coal imported into the Empire. The conclusion accordingly is, that apart from instances when middlemen and retailers have augmented prices on the alleged grounds of passing events, instances, however, which partisans have cited as authentic results, the broad fact remains that prices are regulated by the conditions and causes above indicated. Customs duties from part of the fixed and regular conditions of trade, and may be said to fall upon the consumer; yet, in fact, when the duty is low it becomes absorbed into one or other of the contingent causes which lead to fluctuation in prices, and it does not become chargeable, in any shape which can be specified, to the consumer. Further, it cannot be laid down as a general rule that the consumer will either bear the whole impost when duties are imposed or increased, or will derive the full benefit when they are reduced or remitted.
THE QUESTION OF PREFERENTIAL
We have now to consider the practice of countries holding colonial possessions as to (1) Customs duties charged on the products of these portions of their dominions; and (2) as regards the tariffs in force in these colonies. For a long period it was a fundamental maxim of public policy in all European countries that the commercial interests of their colonies and dependencies should be wholly subordinated to those of the mother country, and often (practically) to the personal interests of the persons or class that governed the State. The Powers which first secured transmarine possessions insisted strenuously upon the monopoly of the trade between the mother country and colonies. In the course of time the system had to be modified, but up to a late period in the
last century reciprocal preferential treatment prevailed. It has been shown that in the British tariff the principle of the equalisation of Customs duties on colonial and foreign goods was not generally adopted until 1860, and not entirely adopted until 1866. The home government introduced into the treaties of 1862 with Belgium, and of 1865 with the Zollverein, wholly unprecedented provisions, which prevented preferential treatment by British colonies in favour of the United Kingdom. These treaties are happily no longer in force. The general policy of the home government has been to leave the self-governing colonies free to settle their own Customs duties. In the case of India and the Crown colonies adherence to the broad principles of the home policy is required, with latitude of action as to details by the local administration.
With respect to foreign countries, the present practice of different Powers is well summarised in the recent Board of Trade Blue Book (Cd. No. 1761) on British and Foreign trade and industrial conditions. The summary given at p. 133, as regards the present practice of foreign powers relative to Customs on colonial products, and colonial tariffs now in force, is as follows:
"(A)—Germany and Holland accord no preference to Colonial produce.
"France admits the products of her principal Colonies free, or at reduced rates, but imposes the minimum tariff (which is that applicable to goods from the United Kingdom) on the produce of Tunis and the minor Colonial possessions, certain articles being, however, exceptionally admitted free, often in limited quantities.
"Portugal admits most articles from Colonies imported in national vessels at a 50 per cent. preference.
"Spain imposes the ordinary tariff, except on certain specified articles which are admitted free.
Denmark admits produce of Iceland, Faroe Islands, and Greenland, free, but apparently imposes the ordinary tariff on West Indian produce.
"The United States of America admit the produce of Porto Rico and Hawaii free, but impose duties equal to 75 per cent. of their ordinary tariff rates on imports from the Philippines.
Japan imports Formosa produce free. "(B)—German, Dutch, and Danish Colonies accord no preference to the produce of the mother
"French Colonies submit French produce to various duties (Octrois de Mer) on importation, but have in general an additional Customs tariff imposed on foreign goods only. In the principal Colonies this tariff is practically identical with the
Germany is a colonial power of very recent date. The colonial system of the present German empire has therefore little bearing on the present question. Some German Baltic ports formerly had colonial interests; but German States were not colonial powers in the period known as the European colonial era. Courland once held a West India island. It is sufficient to say in these remarks that the liberal commercial policy of the Netherlands is quite recent. France, the Netherlands, Por
tugal and Spain maintained a colonial policy opinion in the colonies is adverse to the
There is no reason to believe that public
fully as restrictive as that of England in fiscal
policy enumerated in these resolutions. Some adverse speeches of private irresponsible persons, made for party purposes, in one or two colonies, and in this country, cannot be weighed against these official representations, which have not in a single instance been disavowed. It must further be strongly urged that the position of India and of the Crown Colonies in these matters, although less articulate than that of the self-governing colonies, is equally important.
The preceding statement proves that uniformity of Customs duties on colonial and foreign products alike was not part of the free trade policy adopted by Parliament between 1842-46. It was a subsequent development of that policy, and only finally carried into effect in 1866. Several Powers still place their colonial trade on a preferential footing. It is further to be remembered that colonies not being "third" or "foreign countries, to which countries the engagement of the most favoured nation treatment article in commercial treaties applies, international law, as well as international usage, authorises preferential treatment of colonial trade. The action, therefore, of any foreign Power which subjects colonial produce to differential treatment, on the ground that a particular colony affords preferential treatment to the goods of the mother country, or of another colony, is a new departure in international transactions, and at variance with the comity of nations.
At a conference of the Premiers of the selfgoverning colonies held in London, in 1902, the following resolutions were agreed to :—
lopment of the resources and industries of the several parts, strengthen the Empire.
(2) That this Conference recognises that, in the present circumstances of the Colonies, it is not practicable to adopt a general system of Free Trade as between the Mother Country and the British dominions beyond the sea.
(3) That with a view, however, to promoting the increase of trade within the Empire, it is desirable that those Colonies which have not already adopted such a policy should, as far as their circumstances admit, give substantial preferential treatment to the products and manufactures of the United Kingdom.
(4) That the Prime Ministers of the Colonies respectfully urge on His Majesty's Government the expediency of granting in the United Kingdom preferential treatment to the products and manufactures of the Colonies, either by exemption from or reduction of duties now or hereafter imposed.
(1) That the Conference recognises that the principle of Preferential Trading between the United Kingdom and His Majesty's dominions beyond the seas, would stimulate and facilitate mutual commercial intercourse, and would, by promoting the deve
(5) That the Prime Ministers present at the Conference undertake to submit to their respective Governments at the earliest opportunity the principle of these resolutions, and to request them to take such measures as may be necessary to give effect to it.
The delegates of the Chambers of Commerce of the Empire, at their meeting held at Montreal last August, unanimously adopted the following resolution upon the suggestion of Lord Strathcona :
"It is resolved that, in the opinion of this Congress, the bonds of the British Empire shall be materially strengthened and the union of the various parts of His Majesty's dominions greatly consolidated by the adoption of a commercial policy based upon the principle of mutual benefit, whereby each component part of the Empire would receive substantial advantage in trade as the result of its national relationship, due consideration being given to the fiscal and industrial needs of the component parts of the Empire.
"That this Congress urges upon His Majesty's Government the appointment by them of a special commission, composed of representatives of Great Britain and her Colonies and India, to consider the possibilities of thus increasing and strengthening the trade relations between the different parts of the