IMAGE EVALUATION TEST TARGET (MT-3) V /. .// ^ '^ w., Q- y ^ W/J. 1.0 I.I IIM mil 2.5 IIIIIM illllU li, 4 1.8 1.25 1.4 1.6 -• 6" V] ^cr- e. ejf ^^ oorcr by its folly. Among various other bad couKequences that have followed from the surrender by rarliament of its authority to maintain one uniform system of com- mercial policy for the whole Empire and from the consequent adoption by some Colonics of the system of Protection, one of the worst is that of its having tended to diminish, not only in these Colonies but throughout the whole extent of the British dominions, a sense of the community of interest which really exists among all the various members of the Empire, and which forms the only bond to be relied upon for keeping it together. Several of the protecting duties imposed by the colonial legislatures have had the effect of prevent- ing certain products of British industry from com- peting on equal terms with similar goods produced in the Colonies that have adopted tariffs containing such provisions, and this has not unnaturally created an angry feeling in the minds of merchants and manufacturers in this country whose trade has been thus impeded. They have considered the adoption of such measures by the colonial legislatures to in- dicate the existence in them and in the population they represent of a selfish jealousy of their fellow-subjects in the United Kingdom ; nor can it be denied that S rOLONIKS AND THE M.KINMOY TAIUI-K 21 it was by no moanfl unroasonaMo to regard it in this light. iVt tho same time it has hclpcMl to foster, if not to create, thoae narrow feeliiigfl of commercial jealousy in the people of the Colonies it was here believed to indicate. And it is not only between this country and the Colonies but between the different Colonies with each other that feelinii tlio Hultjont of this pii!ii[»hlct as to miike it pro^xT that I should notice it somowhat fully. I refer to the seheme which has heeii i)ut forward for scekiuiT to establish a closer union between the mother-country and the Colonics by means of some ehanixc to be made in their commercial relations with ea(;h other, which it is asserted would confer f;reat advantages on both, and which is to be effected by the aid of a body calling itself "The United Empire Trade League." This scheme is said to have received many promises of support, but its promoters have not yet laid before the public any clear and full explanation either of the precise nature of the change they desire to have made in our existing commercial system, or of the manner in which this change is expected to produce the promised advan- tages, though the need for such an explanation was very distinctly pointed out by Lord Salisbury to a deputation from the League which waited upon him some months ago. What comes nearest to the ex- planation which it is so necessary for the promoters of the scheme to give, if they have any confidence in it, is contained in some resolutions quoted by Colonel Howard Vincent, in a letter to the Times} as having been passed in several of the Colonies in nearly the same terms, and expressing the opinion ^ Times of tbo 25th of September last. II 1 "l^l'l ill" 1 111; 24 THE COMMERCIAL POLICY OF THE BRITISH that — " The principles citlvoeated by the Uuited Empire Trade League, of preferential trading relations between all parts of the British Empire, will be of the highest individual and collective advantage." These words seem to imply a desire to return to the old system of seeking to encourage various branches, both of our domestic and colonial industry, by pro- tecting duties and artificial restrictions ; but though it is diflicult to attach any other meaning to the words, it seems incredible that this can be that which they arc intended to bear. It is hardly to be supposed that it can be seriously demanded that the nation should revert to a system which was got rid of nearly half a century ago, because it was found to impose so heavy a burden on the Colonies as well as on this country, and when the experience of many years has now proved that its abolition has con- ferred very great advantages on all the parties con- cerned. But if a return to the old system of colonial trade is not what the promoters of the League desire, I am at a loss even to form a guess as to any measures that could be adopted in the direction to which they point which would be of advantage to the Colonies. It must be remembered that we raise a very large revenue in this country by customs duties not one of which is of a " protecting " character ; they are all levied on articles which arc either not produced at i i; ! I ;• I. ,1 large COLONIES AND THE McKINLEY TARIFF 25 home, liko tea and tobacco, or if like spirits they are produced at home, they are subject to a tax which is regarded as equivalent to the duty on foreign imported spirits, so that no advantage is given to the home over the foreign producer ; we cannot afford to dispense with the revenue thus obtained, or permit the productiveness of the duties by which it is raised to be diminished, by allowing colonial produce to be brought into our market charged with a lower duty than that paid by our own and foreign producers ; still less could we consent to favour colonial producers by charging duties from which they should be exempt on the importation from foreign countries of articles now admitted free.^ For these reasons it seems to be clear taat no attempt to draw closer the bonds of union between 1 Since these sentences were written I have been told that it has been suggested by some persons who declare their adherence to the policy of Free Trade, that it might be well worth making even a considerable economic sacrifice for the purpose of creating some stronger bond of union than now exists between this country and the other dominions of the Crown. With this viesv it has, I xinderstand, been proposed that in all the British dominions 3 or 5 per cent, should be added to the duties levied by them on such imports as come from foreign countries, and that the produce of this tax should be applied as a contribution to the expense of maintaining the Royal Navy. This scheme is open to several obvious and fatal objections ; it is sufficient to mention that it is essential for its success that it should be adopted in all the British dominions, and the unanimous assent to it of all the Colonies having representative institutions would be little likely to be obtained. If it could, the imposition of such a tax in the Colonies where the Crown has the power of 2G THE COMMERCIAL POLICY OF THE BRITISH the several parts of the Empire by an alteration of our commercial policy could possibly prove successful, and I have no hesitation in expressing my firm conviction that in order to attain this desirable object we ought to look to measures in precisely the opposite direction, and endeavour to induce the Colonies to join with us in again adopting '* in its full integrity " the Free Trade policy entered upon by the repeal of the old Corn Law in 1846, and completed and successfully acted upon in the following years. I am aware that owing to what has been done since in a contrary sense, and to the present state of colonial opinion, there is little or no chance that any of our principal Colonies would now agree to give up the policy of Protection, and as the Imperial Govern- ment acquiesced in, if it did not encourage their adopting it, their departing from it could not now be insisted upon. Still, the benefit they would gain from a change of policy, as well as the loss and injury they really suffer from that which they are now pursuing, can hardly fail to become by degrees understood, so that the day would probably come (though it might not be an early one) when they would not refuse to abandon their present system of diverting industry from its natural channels, if earnest efforts were made legislation, and in India, would involve too flagrant a violation of the fundamental principles of the policy of Free Trade to be sanctioned by any Government which is not prepared altogether to abandon that policy. i COLONIES AND THE McKINLEY TARIFF 27 by her Mcajesty's Ministers to bring about this result. Though the Home Government and Parliament have thrown away the right of insisting that all her Majesty's dominions should conform to the com- mercial policy of the Empire, it is probable that the Colonies having representative governments (with which alone there could be any difficulty) might be led to recognize the expediency of doing so, and of abandoning the system of Protection as injurious to their true interest, by a judicious exercise of the authority and legitimate influence of the Ministers of the Crown. Unfortunately there is reason to fear that this is not the use that will be made of their power and influence, since they have not shown signs of much earnestness in their support of the policy of Free Trade. It is true they have disclaimed any wish to alter the fiscal system of the United Kingdom in the direction of a return towards Protection, and I have no doubt that no attempt to do so will be made, since it would meet with difficulties too great to be encountered. But it is not enough that they should abstain from taking any retrograde steps ; more is required in order to obtain for the nation the full benefits (which it has not as yet secured) of the policy of Free Trade. For that purpose it is necessary that the conduct and language of the Ministers to whom the government of the country is entrusted should ill ''I' ;il''i 28 THE COMMERCIAL POLICY OF THE BRITISH give unequivocal proof of their confidence in it, and of their determination to maintain it in its full integrity. They have been far from acting in this spirit. Even with regard to our domestic trade they have not declared with as little reserve as was to be wished their full adherence to the principle formerly acted upon by this country of refusing to discuss with foreign nations the rates of duty to be charged on its imports. With regard to the Colonies they have gone much farther, and have even encouraged them to look to the retention of their protecting duties, and to negotiation with other States for mutual com- mercial favours for the means of extending their trade. They have also abstained from all attempts to lead the colonial legislatures to conform to the commercial policy of the Imperial Parliament even when such attempts might have been made with advantage. This remark applies especially to Canada, where the question has arisen whether any, and if so what, steps should be taken to guard British North America from the injury it is feared that it may suffer from the adoption by the United States of the McKinley tariff. This question has necessarily led to much discussion in the several provinces of the Dominion, and is one of very great import- ance not only to Canada but also to the Empire. It is much to be regretted that this discussion has been COLONIES AND THE McKINLEY TARIFF 29 carried on in Canada witli more of party spirit than of the calm reasoning wliifh is required in order to come to a wise decision as to the measures to be adopted to promote the welfare of its people. During the late general election in the Dominion, a fierce con- troversy raged upon this subject, and I think it must have appeared to most of those who, like myself, watched its progress from a distance and free from any party bias, that those who were engaged in it on both sides have failed to give a sufficiently clear explanation of the policy each has striven to recom- mend to the electors, or to consider with enough care what would be the effect of adopting it. Thus on one side there have been frequent afc;sertions of the necessity of establishing complete freedom of trade between the United States and Canada, but no account has been given of the arrangements by which it is proposed that this object should be carried into effect, nor do the difficulties that would have to be encountered in deciding upon such arrangements appear to have been seriously considered. Yet these difficulties would be great ; it is obvious that, if com- plete freedom of trade is to be established between British North America and the United States, the same duties upon imports must be levied in both territories, since, if they were not so, but higher duties were levied in the one than in the other, goods would be imported into that where the duties were lowest for rr 30 THE COMMERCIAL POLICY OF THE BRITISH tliG purpose of being afterwards carried into the one in which they were higher, which would thus lose i)art both of the trade and of the revenue to which it would be fairly entitled. Canada, therefore, in order to obtain the perfectly free intercourse with the United States which is demanded by one party, must consent to have its commerce with the rest of the world, including the United Kingdom, regulated by the revenue law of the United States, in settling which it has had no part, and which may at any moment be altered by a Congress in which it has no voice. The immediate effect of this would be to subject the people of Canada to the heavy burden of the new protective tariff of the United States, by which many important articles of consumption are subjected to extravagant duties, these being in some cases intended to give artificial encouragement to branches of industry not now carried on in tlie Dominion, so that they would tax its inhabitants for objects in which they have no interest. An oppres- sive burden would in this manner be imposed on the whole population of British North America, and a great obstacle would be thrown in the way of the extension of its trade with all other parts of the world except the United States. This is not the only difficulty that would be met with in establishing a Commercial Union between these States and Canada,. Another very serious one COLONIES AND THE McKINLEY TARIFF 31 would arise in liii(liii;]j means for securing to each of the parties concerned its fair share of the revenue derived from the customs duties to which both would be subjected. At present it is to be remembered that the revenue derived from these duties in the United States is appropriated by Congress (not by the State legislatures) to purposes which concern the whole Union, such as the maintenance of the army and navy, the expense of the Federal Government and of the diplomatic service, with various other charges of like character. The several States which compose the Union have not, as such, any control over the expenditure of the large revenue levied from their inhabitants by duties on imports. The formation of a Commercial Union between the Dominion and the United States would involve the necessity of paying the money received for duty on goods consumed in the Dominion into one fund with the customs duties levied in the States, since many of the goods intended for Canadian consumption would, be sent through them, and pay duty in their ports, while on the other hand some portion of the goods meant for consumption in the States would reach them through the ports of the Dominion, and pay duty there. As it would obviously be impossible to distinguish at the ports of entry of either territory on which side of the frontier the goods there charged with duty w^ould be consumed, the whole would have to be included in the general ;2 THE COMMERCIAL POLICY OF THE lUUTISH 'i] rrl receipts from customs duties by the United States, and thus form part of the revenue of which the appropriation rests with Congress. But the population of the Dominion could not be asked to allow the produce of taxes paid by them to be applied to objects in which they have no interest, by an authority in whi(;h they have no share. Justice would require that some arrangement should be made for placing at the disposal of the Canadian Parliament such a pro- portion of the total revenue derived from customs by the whole Commercial Union as should fairly represent the share borne by the iuhal)itants of British territory of the burden of the taxes by which the revenue is raised. It would be no easy matter to devise an ar- rangement of this nature which would be really fair to both the parties concerned, and still more difficult to suggest one that they would think so, and that would not become a fruitful source of irritation and disputes between two States politically independent of each other, but joined together in this strange commercial partnership. Even if it could be success- fully started (which is not probable), it is scarcely possible that such a partnership could be long carried on in this manner, so that if the Commercial Union is to be established and maintained, its leading to a political union must be looked for. Some of the ad- vocates of a Commercial Union, including the most i!: COLONIES AND THE McKINLEY TARIFF 33 energetic and rnnaistent of tlieir nunilxT, Professor Goldwin Sniitli, do not sliriiik from avowing that this wouUl he the in»;vital)le conseqiienee of its adoption, but consider this to be no reason for rejecting the measure, Init, on the contrary, an argu- ment in its favour. This, however, there is reason to hope is not the view taken of the su])ject by the majority of those who have joined in the cry for complete freedom of commercial intercourse between the United States and the Dominion. What they seem generally to desire is the entire removal of obstacles to an unrestricted exchange between them- selves and their neighbours beyond the frontier of what they respectively produce, without sacrificing their present position as forming part of the great British Empire. I believe them to be mistaken in supposing that their entering into a Commercial Union with the great adjoining Republic is compatible with their maintaining their political independence and refusing a complete junction wath it. But though in this respect I believe them to be in error, I do not doubt that they are right in wishing for a large alteration and improvement in their trading relations with their neighbours, and I will presently endeavour to show that this might be effected in such a manner as to secure for them all that is really required for their benefit, without affecting their political position. Before however I attempt to do this, I must first c ji ll 34 T1[E COMMKllCIAL POLICY OF TlfK I5IUTISII ofTer some ohsprvations both on tlic evil oonscfjucnccs to Canada thiit might bo expected to foHow from its consenting to bo united politieally as well as commercially with tho United States, and also on the views as to what ought to be the commercial policy of Canada which have boon declared by the late Sir John Macdonald and by the present leaders of the party of which he was so long the chief. If it were determined that what is now British North America should become part of the adjoining Republic, it is to be presumed that the provinces which now constitute the Dominion would 1)0 formed into two or three, or perhaps a greater number, of separate States, each exercising the powers which are reserved to the several States by tho American con- stitution, being as regards matters of general interest under the authority of the Federal Government of the Republic. Each of the new States would of course send its due proportion of members to the two Houses of Congress, and would l)e entitled to adopt such a constitution for its own government as it might think fit. By this change British North America, instead of forming as it now does a nation already rising rapidly into importance, would fall back into the condition from which it has emerged, of being a number of separate States having no organisation to enable them to act in concert with each other, either in carrying on great public works such as those which COLONIKS AND THE M. KINLKY TAIllFF 35 have been alrcjidy couHtructcd, or in niulving postnl ;in(l other arningomonts for their eotnmoii benefit. For (h'ulini^ with all subjectH of tliis kind in which the concurrence of more than one State is rer|nircd, tlie iiiha1)itants of the new States formed out of the Dominion wouhl have to depend upon Congress and the Federal Government at Wasliington, in which their interests wouhl command comparatively little attention. At the same time, the burden of taxation would be largely increased, as they would no longer have the revenue from customs at their disposal, and would probably have to provide for various expenses which are now met from this source by direct taxation. Their leading men, instead of having a political career open to them among their friends and neighbours in a government and legislature exercis- ing large powers and dealing with important and interesting affairs, would only have a field for the exercise of their talents in the subordinate State governments, or in the distant Federal Government and in Congress at Washington, where they could only expect to hold an insignificant position in one or other of the parties which are there mainly oc- cupied in the scramble for offices which is always going on. Such would be the probable, I might almost say the certain, results that w^ould follow to the people of British North America if their connection with the V 2 I)' it; r.f) TMK CO.MMKUCIAI, roMCV oK Till: llRITlSlt Empire (»f which thoy fonn so im})ort.'viit a part woro brokon, in order that they might join the giant Republic aoroSvS their frontier ; iind .'mother strong reason remains to be noticed for their adhiniiig to what I rejoice to hear is the firm (h^tfirmination of tlic great majority of their number to resist sueli a change. Should whiit are now the several provinces of the Canadian Dominion l)e formed into new States of the American Union, their populations woidd be involved in all its party contests, by having to vote in the presidential elections and to return members to Congress, and their whole system of government would be assimilated to that of the older States of the Union among which they would take tlieir place. But if the actual working of the American system of government on the one hand is compared with that of the Canadian Dominion on the other, as regards the effects of each on the true welfare of the populations which live under it, I think few impartial and competent judges would hesitate in pronouncing a decided opinion that the inhabitants of British North America would be groat losers by exchanging their present system of government for a new one on the American model. It would lead me too fixr from my present subject to attempt a full explanation of my reasons for holding this unfavourable opinion of the American Government as it now exists, with the various modifications it has undergone since the days COLONlIiIS AND TlIK McKlNLEY TAKIFF 37 of "Wjisliiiitrton ; but 1 m.'iy observe that in tlio United StiiteH what is tlio very firat want of every civilised society, that of iiaving tlie hiw fairly and firmly administered, is by the showing of the Americans themselves very imperfectly provided for. The tribunals in the United States fail to command public confidence, eitlier in criminal or in civil cases. Tragic proof of the want of this confidence in the administration of criminal justice luis been afibrded by the recent terrible scene in New Orleans, when a number of Italians were i)Ut to death l)y a mob without being allowed an opportunity of trying to show their innocence of crimes imputed to them, and of which as regards some of them at least there seems to have been little if any evidence. The language snid to be often held by Americans about their civil courts seems to imply a general belief that suitors in them cannot rely upon them in having justice done to them against wealthy and powerful adversaries. Both civil and criminal cases appear, from such accounts as I have seen, to be dealt with more efficiently and more impartially by the Canadian tribunals, and they command accordingly greater public confidence. In the territory under their jurisdiction men have never, so far as I am aware, been put to death without trial by " Lynch " — or, as it might better be called, "Mob" — law, because the 38 THE COMMERCIAL POLICY OF THE BRITISH firm administration of the regular criminal law cannot be relied on.^ In another respect the Government of Canada seems to show a marked superiority over that of the United States. Recent disclosures have proved that the Dominion has not escaped what has been the bane of free governments in all ages, the use of corruption in one or more of its innumerable forms for the purpose of obtaining political power. But though the abuses of which the existence has been brought to light by the late inquiry of the Dominion Parliament are very grave, they do not indicate such a general and deep demoralisation of the population, by the habitual use of corrupt influence in party contests, as that which has been produced in the United States by the presidential elections, since they have been conducted on the principle that " to the victors belong the spoils." This maxim, which was first proclaimed some half centur}'- ago, has since been very generally acted upon, and it seems to be now recognised as part of the regular system of the American constitution, that the transfer of power from one poll Heal party to another by the result of a presidential election should be followed by a corresponding transfer of tlie offices ^ An article in the Fortnightly Review for January by Mr. W. Roberts on the administration of justice in America shows that the evil is far greater than I had imagined to be possible when the above was written. m COLONIES AND THE McKINLEY TARIFF 39 of the Federal Government — the lowest as well as the highest — from one set of men to another. This practice, which if I am not mistaken is entirely opposed to that wliich prevailed in the earlier years of the American Union, has tended greatly to increase the bitterness of party contests, by giving a large proportion of the whole people a strong pecuniary interest in the result of every presidential election, which practically determines for the ensuing four years whether the whole body of the civil servants of the Federal Government shall be taken from one party or from the other. It tends also to encourage grave abuses in the conduct of these elections, since when the battle has been won, and the " spoils " according to the present practice have to be divided amongst the " victors," the best shares in the booty will naturally be assigned to those who have been most active and successful (which unfortunately generally means the most unscrupulous) in their endeavoui-s to secure it. Thus the majority of those who fill offices in the public service under the Federal Government may be expected to be extreme partisans, who have earned their places by the zeal they have shown in the election of the President by whose authority these places have been given to them. From men thus appointed, and who cannot reckon upon holding their offices for more than four years, it would be unreasonable to look for such an able or 40 THE COiMxMEKCIAL POLICY OF TJIK iUUTJSlI ■f such an honest discharge of tlieir duty to the public as in this country we confidently rely upon obtaining from a body of experienced public servants who know that they practically hold their situations during good behaviour, and that unless they forfeit them by mis- conduct they will be allowed to retain them until they can retire upon the pensions to which in due time they will be entitled. Under the very different system which prevails in the United States, the civil servants, by whose aid the Ministers at the head of the various departments of the Government carry on its business, have not an opportunity of gaining that knowledge and experience which enables the perma- nent members of our j)ublic dejiartments to render such invaluable assistance in managing the affairs of the nation, nor have they the powerful motive for abstaining from misconduct which is created by a knowledge that it will endanger their continuing to enjoy a secure provision for their lives. Instead of this the holders of subordinate offices in the public service of the United States are under a strong tempta- tion to make the most of any opportunities their probably short tenure of their offices may afford of enriching themselves by improper means. We cannot, therefore, be surprised at finding, from time to time, in the intelligence which reaches us from America, indications that in the United States it is much less rare than in this country to hear of scandals as to COLONIES AND THE McKINLEY TARIFF 41 dishouest gains alleged to have been made by those entrusted with the details of public business. The Republic must suffer greatly, both in its pecuniary and its moral interests, from the existence of such abuses, but though there appears to be a strong sense of the serious character of the evil among many of the best men in America, no effectual steps have yet been taken to abate it. The public in general, it must be presumed, has no wish for a reform in this matter, since it might easily be effected by a very simple law, but Congress has not been asked to pass one. In maintaining that the Canadian people have now the advantage of living under a better system of Government than that under which they would be placed if they were to join the Republic of the United States, I do not mean to deny that Professor Goldwin Smith, in his late work on Canada and the Canadian question, has proved that there are great faults in the present constitution of the recently formed Dominion, and that it is not unreasonable to attribute to these faults the gross abuses that are shown to have taken place in its expenditure on public works. Admitting, as I must do, the force of the Professor's arguments as to the faults of the present constitution of the Canadian Government and their tendency to encourage political corruption, I entirely dissent from his con- clusion that the Dominion ought to be broken up and its territory added as new States to the American |:'i 42 THE COMMERCIAL POLICY OF THE BRITISH Union. On the contrary, I believe that by taking this course the population of that territory would exchange whatever evils they are now suffering from defects in the constitution and practice of their Government for greater evils of the same kind, that they derive great advantage from their union witli each other and with the British Empire, and that what they ought to endeavour to accomplish is not a total change in their existing political condition, but such a reform in their institutions as may be found necessary in order to correct their faults without abandoning what is really good in them. And it is highly satis- factory to observe that the people of the Dominion seem to have exhibited with reference to the abuses lately discovered in the management of their affairs an earnest desire to guard against the recurrence of similar abuses in the time to come, very different from the apathy of their neighbours in submitting to the far more serious evils which notoriously arise from the prevalence of corruption, especially with reference to the presidential elections. It is earnestly to be hoped that judicious steps may be taken to accomplish the reform which has been shown to be so much needed in the Dominion, and I will venture to suggest that it deserves to be considered whether it would not be advisable for that purpose to appoint a small commis- sion of able men, as free as possible from party bias, to inquire what are the real defects in the constitution COLONIES AND THE McKINLEY TARIFF 43 of the Government of tlie Dominion and in its practical working, and to report to tlie Canadian Parliament their opinion as to how the faults they may discover might be best corrected. Having thus endeavoured to explain the objections which may be urged, on political as well as on economical grounds, to the commercial union with the United States which the Opposition party in Canada has recommended as the best mode of guard- ing the Dominion from the evils it is considered likely to suffer from the new tarifi* of the American lie- public, I must now attempt to show that what has been proj^osed by the Ministerial party for the same purpose is open to equal or nearly equal objections. In order rightly to understand these objections it is necessary to bear in mind what had been the previous commercial policy of the Canadian Government. When, several years ago, the late Sir J. Macdonald induced the Canadian Parliament to impose high protecting duties on various imports, he defended this measure not only because he held it to be de- sirable to encourage in this manner certain branches of Canadian industry, but also on the further ground that these duties were required in order to provide for the charge which would be thrown on the Treasury of the Dominion by the construction of the great public works he contemplated. These works, and especially the railway which was to create I f II .1 1) ;'< .!•: ■ 1' 41 THE COMMERCIAL POLICY OF THE BRITISH a new line of communication between the Atlantic and Pacific Oceans, would, he contended, confer great advantages on all the provinces of the Dominion by extending their trade and drawing closer their union with each other and with the British Empire ; but the cost at which these advantages could be obtained would necessarily be large, and could only be con- veniently provided for in the manner he proposed. Though Professor Goldwin Smith has advanced arguments, which cannot be denied to haA^e much weight, against the policy of imposing so heavy a pecuniary charge on the Dominion by constructing these works, the benefit already derived from them, and the prospect of still greater benefit likely to arise from them hereafter, lead me now to believe (contrary to what was my original opinion) that on the whole the measure has turned out to be a w^ise one, tliough I admit that there is still room for doubt on the subject. Assuming it to have been wise to incur the expenditure, I do not dispute that Sir J. Macdonald was right in considering that the imposition of customs duties afforded the most convenient mode of providing the increase of revenue required to meet it, but I hold that a great and unfortunate mistake was committed when it was determined that these duties should be of a protective character. AVhen the policy of Free Trade was adopted in this country, it was not contemplated that customs duties should be given up COLONIES AND THE McKINLEY TARIFF 43 as an important source of revenue ; on the contrary, it was one of the cliicf arguments of the early advo- cates of the a])olition of Protection, that relieving the country from those duties which imposed a burden on the public without bringing in a corre- sponding amount of revenue would tend to increase the amount received from the duties that wore retained. It was held that the essential principle of the Free Trade policy consisted in abstaining from all attempts to divert industry from its natural channels, and in imposing taxes solely for revenue, in such a manner as to take as little money as possible beyond what was paid into the Treasury out of the pockets of consumers. This principle, it was also held, w^ould be fully maintained by acting upon the rule that whenever duties wTre imposed on the importation of articles of consumption, these articles when produced at home should be subject to the same amount of taxation. This rule has always been adhered to in this country since Free Trade was adopted as the national policy. If the same rule had been followed by Sir J. Macdonald, and if he had advised the Canadian Parliament to raise the additional revenue that was required for public works by imposing moderate customs duties of such a character as to avoid inflicting any needless burden on the consumers, the money that was wanted might have been got with far less pressure on the popula- 40 THP: commercial policy of the BRITISH ■I 1 '' .1 ' tion than was caused ^ j protecting duties which were resorted to. It is probable u his being ah'cady so deeply committed to what I have endeavoured to show was a mistaken commercial policy that induced Sir J. Mac- donald to adopt the course he did, when the question arose as to how the adoption of the McKinley tariff by the United States ought to be met by Canada. If I understand correctly such of his speeches on this question as I have had an opportunity of reading, I find that while he denounced the project of his opponents to seek, either by a complete or onl}'' a commercial union with the United States, relief for the Dominion from the difficulties it was expected to suffer from this adoption of the McKinley tariff, he had himself nothing to suggest for that purpose except that an attempt should be made to enter into an agreement with the United States, by which each of the two Governments, while maintaining its general system of granting protection to native industry, should allow the free admission to its markets of certain imports from the other on the principle of reciprocity. For the success of this policy, to which I believe the present Canadian Ministers adhere, it would be necessary not only that there should be a disposition, of which there is no sign, on the part of the Government of the United States to come to a fair arrangement with Canada on this principle, but also that COLONIES AND TIIK McKINLEY TAIllFF 47 it slioulcl have the power of ol)tuiiiing for it the suiie- tion of Congress. Tlie proceedings of that body on tho M(;Kiidey tariff afford little ground for ex})eeting thnt its assent to a hiw for giving effect to such an agree- ment woidd be easily or (piickly ol)tn,ined, more es[)ecia]ly as it is hard to see what inducements could 1)0 offered to the United States for making commercial (;oncessions to Canada. It may, therefore, bo con- cluded that little or no hope of gaining any advantage in the manner suggested by Sir J. Macdonald can be reasonably entertained. As any attempt to bring about an improvement of the commercial relations of Canada with the United States on the principle of reciprocity seems thus fore- doomed to failure, and as the rival scheme of forming a Commercial Union is not more likely to succeed, there is surely good reason for seriously considering whether it would not be far better for Canada to follow the example of this country, by adopting the system of Free Trade with the same completeness that it was acted upon here during the first years after the repeal of the old Corn Law. This is a question of such extreme importance to the welfare not only of Canada, but also of the British Empire, that, in the hope of obtaining for it some of the attention it deserves, I will endeavour to describe the advantac]res which I believe mioht be o o confidently expected to follow from the change of M jj ^ 'ill 48 THE COMMERCIAL POLICY OF THE BRITISH policy I liavc auggcsteil. Befcn-c; I do so I must, however, observe that if, contrary to what at present appears to be likely, the Parliament of Canada should be convinced of the expediency of the proposed change, and should determine to adopt it, I think it ought by some formal proceeding to record its reasons for taking this important step. I do not know how this could be more conveniently done than by its voting resolutions declaring its views, and in order to explain more clearly than I otherwise could the course which I would suggest for its consideration, I venture to give the following sketch of resolutions that might be proposed : — Resolved : (1) That the new tariff of the United States will so materially affect the trade of Canada with these States as to render it necessary very care- fully to consider what measures it is in consequence expedient to adopt to avert the injury which may thus be inflicted on the Dominion ; (2) That, looking to the whole course of the discussions in Congress on the new tariff, and to the communications since held with the Government of the United States by the Imperial Government, and that of the Dominion, there does not appear to be any reasonable ground for expecting that the United States can be induced to enter into a satisfactory arrangement for removing or mitigating the new restrictions imposed on the admission of Canadian produce to their markets ; (3) C0L0NIE8 AND TITK ^Ic KINLEY TARIFF 40 That this l)ning tlie case, it is inexpedient that tlio comnuini(tations vvitli the United States on this Ku])ject which have ah'eady taken place should be carried any further, and it would therefore be advis- able that the Dominion of Canada should, without reference to what may be done by the United States, proceed at once to adopt such measures as may be found most likely to promote its own welfare ; (4) That witli this view it is not expedient to impose new duties on produce imported from the United States, for the purpose of either excluding such produce from the market of Canada or diminishing the amount admitted, in retaliation for the increased restrictions imposed by Congress on importations from Canada ; (5) That the imposition of such retaliatory duties would add to any loss which the new American tariff may inflict upon Canada the further loss to its people of the supplies which they now find it to be for their advantage to draw from beyond their frontier, while no inconvenience to Canada can result from con- tinuing to receive them ; (6) That it is, therefore, expedient that the Dominion, in order to avert any damage which the recent measures of Congress might inflict on its trade, should seek to create new openings for that trade in other quarters ; (7) That for this purpose it would be advisable to adopt the policy successfully acted upon by the British Parliament by abolishing, on the advice of Sir R. Peel and succeed- D r^" 1)0 UK roMMKIHUAl- POIJOY OK TIIK mUTISIf i'.^ inf]j MinlHters, uU (Ik^ protcntin^ dutio.a forimu'ly char<,^e(l on muny importH into the United Kingdom, jind l('vyin|Uf only such duties of euHtomH jis may he requiriMl for riiisini^ reveniU!, and vvlii
  • 1 I' 1 ■; V I liomcs in which they could enjoy such an amount of welfare as to induce them to remain there. When we consider what great natural resources and advantages Canada possesses, it is difficult to see how this fact can be accounted for, except by assuming that there must have been some groat fault in the management of its affairs which has prevented the population from being as well off as they have a right to expect and that many of them have in consequence sought elsewhere for better means of living than Canada has offered. We may also fairly infer that the fault in the management of Canadian affairs must lie in the fiscal and commercial policy that has been acted upon, since there has been no failure in maintaining order and the security of person and property which usually ensure prosperity to an industrious population. Why the eminently industrious population of Canada has not been more successful in reaching the prosperity of which its many advantages held out a promise would be inexplicable, were it not sufficiently accounted for by the vicious system which, professing to give "pro- tection to native industry," has really placed it under conditions greatly diminishing its productive power. Other facts to be gathered from the census and from other sources of information afford further proof that this is the true explanation of the progress of the Dominion in the last ten years having disappointed public expectation. Among these it is deserving of i; COLONIES AND THE McKINLEY TAKIEF 55 special consideration that whatever increase of popula- tion has taken place in the Dominion has been mainly in large towns, while in some agricultural cL