preference mean? It can only mean one thing. It can only mean better
prices. It can only mean better prices for Colonial goods. I assert,
without reserve, that preference can only operate through the agency
of price. All that we are told about improving and developing the
cultivation of tobacco in South Africa, and calling great new areas
for wheat cultivation into existence in Australia, depends upon the
stimulation of the production of those commodities, through securing
to the producers larger opportunities for profit. I say that unless
preference means better prices it will be ineffective in achieving the
objects for the sake of which it is urged. But the operation of
preference consists, so far as we are concerned, in putting a penal
tax upon foreign goods, and the object of putting that penal tax on
foreign goods is to enable the Colonial supply to rise to the level of
the foreign goods plus the tax, and by so conferring upon the Colonial
producer a greater reward, to stimulate him more abundantly to cater
for the supply of this particular market. I say, therefore, without
hesitation, that the only manner in which a trade preference can
operate is through the agency of price. If preference does not mean
better prices it seems to me a great fraud on those who are asked to
make sacrifices to obtain it; and by "better" prices I mean higher
prices--that is to say, higher prices than the goods are worth, if
sold freely in the markets of the world.
I am quite ready to admit that the fact that you make a particular
branch of trade more profitable, induces more people to engage in that
branch of trade. That is what I call stimulating Colonial production
through the agency of price. I am quite prepared to admit that a very
small tax on staple articles would affect prices in a very small
manner. Reference has been made to the imposition of a shilling duty
on corn, and I think it was Mr. Moor[3] who said, yesterday, that
when the shilling duty was imposed prices fell, and when it was taken
off prices rose. That may be quite true. I do not know that it is
true, but it may be. The imposition of such a small duty as a shilling
on a commodity produced in such vast abundance as wheat, might quite
easily be swamped or concealed by the operation of other more powerful
factors. A week of unusual sunshine, or a night of late frost, or a
ring in the freights, or violent speculation, might easily swamp and
cover the operation of such a small duty; but it is the opinion of
those whose economic views I share--I cannot put it higher than
that--that whatever circumstances may apparently conceal the effect of
the duty on prices, the effect is there all the same, and that any
duty that is imposed upon a commodity becomes a factor in the price of
that commodity. I should have thought that was an almost incontestable
proposition.
Here you have the two different sides of the bargain, the sellers and
the buyers, the sellers trying to get all they can, and the buyers
trying to give as little as they can. An elaborate process of what is
called "the higgling of the market" goes on all over the world between
exchanges linked up by telegraph, whose prices vary to a sixteenth
and a thirty-second. We are invited to believe that with all that
subtle process of calculation made from almost minute to minute
throughout the year, the imposition of a duty or demand for L1,000,000
or L2,000,000 for this or that Government, placed suddenly upon the
commodity in question as a tax, makes no difference whatever to the
cost to the consumer; that it is borne either by the buyer or by the
seller, or provided in some magical manner. As a matter of fact, the
seller endeavours to transmit the burden to the purchaser, and the
purchaser places it upon the consumer as opportunity may occur in
relation to the general market situation all over the world.
That is by way of digression, only to show that we believe that a tax
on a commodity is a factor in its price, which I thought was a
tolerably simple proposition. What a dangerous thing it will be, year
after year, to associate the idea of Empire, of our kith and kin
beyond the seas, of these great, young, self-governing Dominions in
which our people at present take so much pride, with an enhancement,
however small, in the price of the necessary commodities of the life
and the industry of Britain! It seems to me that, quite apart from
the Parliamentary difficulty to which I have referred, which I think
would tend to organise and create anti-Colonial sentiment, you would,
by the imposition of duties upon the necessaries of life and of
industry, breed steadily year by year, and accumulate at the end of a
decade a deep feeling of sullen hatred of the Colonies, and of
Colonial affairs among those poorer people in this country to whom Mr.
Lloyd George referred so eloquently yesterday, and whose case, when
stated, appeals to the sympathy of every one round this table. That
would be a great disaster.
But there is another point which occurs to me, and which I would
submit respectfully to the Conference in this connection. Great
fluctuations occur in the price of all commodities which are subject
to climatic influences. We have seen enormous fluctuations in meat and
cereals and in food-stuffs generally from time to time in the world's
markets. Although we buy in the markets of the whole world we observe
how much the price of one year varies from that of another year. These
fluctuations are due to causes beyond our control. We cannot control
the causes which make the earth refuse her fruits at a certain
season, nor can we, unfortunately, at present, control the speculation
which always arises when an unusual stringency is discovered. Compared
to these forces, the taxes which you suggest should be imposed upon
food and raw materials might, I admit, be small, but they would be the
only factor in price which would be absolutely in our control.
If, from circumstances which we may easily imagine, any of the great
staple articles which were the subject of preference should be driven
up in price to an unusual height, there would be a demand--and I think
an irresistible demand--in this country that the tax should be
removed. The tax would bear all the unpopularity. People would say:
"This, at any rate, we can take off, and relieve the burden which is
pressing so heavily upon us." But now see the difficulty in which we
should then be involved. At present all our taxes are under our own
control. An unpopular tax can be removed; if the Government will not
remove it they can be turned out and another Government to remove the
tax can be got from the people by election. It can be done at once.
The Chancellor of the Exchequer can come down to the House and the
tax can be repealed if there is a sufficiently fierce demand for it.
But these food taxes by which you seek to bind the Empire
together--these curious links of Empire which you are asking us to
forge laboriously now--would be irremovable, and upon them would
descend the whole weight and burden of popular anger in time of
suffering. They would be irremovable, because fixed by treaty with
self-governing Dominions scattered about all over the world, and in
return for those duties we should have received concessions in
Colonial tariffs on the basis of which their industries would have
grown up tier upon tier through a long period of time.
Although, no doubt, another Conference hastily assembled might be able
to break the shackle which would fasten us--to break that fiscal bond
which would join us together and release us from the obligation--that
might take a great deal of time. Many Parliaments and Governments
would have to be consulted, and all the difficulties of distance would
intervene to prevent a speedy relief from that deadlock. If the day
comes in this country when you have a stern demand--and an
overwhelming demand of a Parliament, backed by a vast population
suffering acutely from high food-prices--that the taxes should be
removed, and on the other hand the Minister in charge has to get up
and say that he will bring the matter before the next Colonial
Conference two years hence, or that he will address the
representatives of the Australian or Canadian Governments through the
agency of the Colonial Office, and that in the meanwhile nothing can
be done--when you have produced that situation, then, indeed, you will
have exposed the fabric of the British Empire to a wrench and a shock
which it has never before received, and which any one who cares about
it, cannot fail to hope that it may never sustain.
Such a deadlock could not be relieved merely by goodwill on either
side. When you begin to deflect the course of trade, you deflect it in
all directions and for all time in both countries which are parties to
the bargain. Your industries in your respective Colonies would have
exposed themselves to a more severe competition from British goods in
their markets, and would have adjusted themselves on a different
basis, in consequence. Some Colonial producers would have made
sacrifices in that respect for the sake of certain advantages which
were to be gained by other producers in their country through a
favoured entry into our market. That one side of the bargain could be
suddenly removed, without inflicting injustice on the other party to
the bargain, appears to me an impossibility.
I submit that preferences, even if economically desirable, would prove
an element of strain and discord in the structure and system of the
British Empire. Why, even in this Conference, what has been the one
subject on which we have differed sharply? It has been this question
of preference. It has been the one apple of discord which has been
thrown into the arena of our discussions. It is quite true we meet
here with a great fund of goodwill on everybody's part, on the part of
the Mother Country and on the part of the representatives of the
self-governing Dominions--a great fund of goodwill which has been
accumulated over a long period of time when each party to this great
confederation has been free to pursue its own line of development
unchecked and untrammelled by interference from the other.
We have that to start upon, and consequently have been able to discuss
in a very frank and friendly manner all sorts of questions. We have
witnessed the spectacle of the British Minister in charge of the trade
of this country defending at length and in detail the fiscal
system--the purely domestic, internal fiscal system of this
country--from very severe, though perfectly friendly and courteous
criticism on the part of the other self-governing communities. If that
fund of goodwill to which I have referred had been lacking, if ever a
Conference had been called together when there was an actual
anti-colonial party in existence, when there was really a deep hatred
in the minds of a large portion of the people of this country against
the Colonies and against taxation which was imposed at the request or
desire of the Colonies, then I think it is quite possible that a
Conference such as this would not pass off in the smooth and friendly
manner in which this has passed off.
You would hear recrimination and reproaches exchanged across the
table; you would hear assertions made that the representatives of the
different States who were parties to the Conference were not really
representatives of the true opinion of their respective populations,
that the trend of opinion in the country which they professed to
represent was opposed to their policy and would shortly effect a
change in the views which they put forward. You would find all these
undemocratic assertions that representatives duly elected do not
really speak in the name of their people, and you would, of course,
find appeals made over the heads of the respective Governments to the
party organisations which supported them or opposed them in the
respective countries from which they came. That appears to me to open
up possibilities of very grave and serious dangers in the structure
and fabric of the British Empire, from which I think we ought to
labour to shield it.
My right honourable friend the Chancellor of the Exchequer has told
the Conference with perfect truth--in fact it may have been even an
under-estimate--that if he were to propose the principle of preference
in the present House of Commons, it would be rejected by a majority of
three to one. But even if the present Government could command a
majority for the system, they would have no intention whatever of
proposing it. It is not because we are not ready to run electoral
risks that we decline to be parties to a system of preference; still
less is it because the present Government is unwilling to make
sacrifices, in money or otherwise, in order to weave the Empire more
closely together. I think a very hopeful deflection has been given to
our discussion when it is suggested that we may find a more convenient
line of advance by improving communications, rather than by erecting
tariffs--by making roads, as it were, across the Empire, rather than
by building walls. It is because we believe the principle of
preference is positively injurious to the British Empire, and would
create, not union, but discord, that we have resisted the proposal.
It has been a source of regret to all of us that on this subject we
cannot come to an agreement. A fundamental difference of opinion on
economics, no doubt, makes agreement impossible; but although we
regret that, I do not doubt that in the future, when Imperial
unification has been carried to a stage which it has not now reached,
and will not, perhaps, in our time attain, people in that more
fortunate age will look back to the Conference of 1907 as a date in
the history of the British Empire when one grand wrong turn was
successfully avoided.
FOOTNOTES:
[2] The following, among others, were present at the Conference:
The Earl of Elgin, Secretary of State for the Colonies; Sir Wilfrid
Laurier, Prime Minister of Canada; Sir F.W. Borden, Minister of Militia
and Defence (Canada); Mr. L.P. Brodeur, Minister of Marine and
Fisheries (Canada); Mr. Deakin, Prime Minister of the Commonwealth of
Australia; Sir W. Lyne, Minister of Trade and Customs (Australia); Sir
Joseph Ward, Prime Minister of New Zealand; Dr. L.S. Jameson, Prime
Minister of Cape Colony; Dr. Smartt, Commissioner of Public Works (Cape
Colony); Sir Robert Bond, Prime Minister of Newfoundland; Mr. F.R.
Moor, Prime Minister of Natal; General Botha, Prime Minister of the
Transvaal; Sir J.L. Mackay, on behalf of the India Office.
[3] The Prime Minister of Natal.
IMPERIAL PREFERENCE
II
HOUSE OF COMMONS, _July 15, 1907_
Mr. Lyttelton had moved the following vote of censure:
"That this House regrets that his Majesty's Government
have declined the invitation unanimously preferred by the
Prime Ministers of the self-governing Colonies, to
consider favourably any form of Colonial Preference or
any measures for closer commercial union of the Empire on
a preferential basis." (Mr. Lyttelton.)
This was met on behalf of the Government by the following
Amendment:
"To leave out all after the word 'that' and add the words
'In the opinion of this House, the permanent unity of the
British Empire will not be secured through a system of
preferential duties based upon the protective taxation of
food.'" (Mr. Soares)
The vote of censure was rejected, and the Amendment carried
by 404 to 111.
A vote of censure is a very serious thing. When it is moved with great
formality on behalf of the official Opposition, it is intended always
to raise a plain and decisive issue. I must, however, observe that of
all the votes of censure which have been proposed in recent times in
this House, the one we are now discussing is surely the most curious.
The last Government was broken up three years ago on this very
question of Imperial preference. After the Government had been broken
up, a continuous debate proceeded in the country for two years and a
half, and it was terminated by the general election. This Parliament
is the result of that election, and there is not a single gentleman on
this Ministerial Bench who is not pledged, in the most specific terms,
not to grant a preferential tariff to the Colonies. Now, because we
have kept that promise, because we are opposed to preferential
tariffs, because we have declined to grant preferential tariffs, and
because we have done what all along we declared we were going to do,
and were returned to do, we are made the object of this vote of
censure.
It may be said, "We do not blame you for keeping your promise, but for
making the pledge." But what did the Leader of the Opposition promise?
He promised most emphatically before the election that if he were in
power as Prime Minister when this Colonial Conference took place, he
would not grant preference to the Colonies. On many occasions the
right hon. gentleman said that not one, but two elections would be
necessary before he would be entitled to take that tremendous step. I
have the right hon. gentleman's words here. Speaking at Manchester in
January 1905, the right hon. gentleman said: "If that scheme were
carried out, I do not see that we could be called on to decide the
colonial aspect of this question until not only one, but two elections
have passed." Yet the right hon. gentleman is prepared, I presume, to
join in a vote of censure on his Majesty's Government for not granting
that preference which he himself was prohibited from granting by the
most precise and particular engagement.
Is it a vote of censure on the Government at all? Is it not really a
vote of censure on the general election? Is it not a cry of petulant
vexation at the natural, ordinary, long-expected sequence of events?
The right hon. gentleman[4] who moved the Resolution made a very mild
and conciliatory speech. But he confined himself to generalities. He
avoided anything like a statement of concrete proposals which he
thinks the Government ought to adopt. Those who take part in this
controversy nowadays avoid any statement of the concrete proposals
that would follow if their view were adopted. We are told what a
splendid thing preference is, what noble results it would achieve,
what inexpressible happiness and joy it would bring to all parts of
the Empire and to all parts of the earth, what wealth would be
created, how the Exchequer would gain, and how the food of the people
would cheapen in price. But, though the Government is blamed for not
acting on these suggestions, we are never told what is the schedule of
taxes which it is proposed to introduce to give effect to these
splendid and glittering aspirations.
It is perfectly impossible to discuss colonial preference apart from
the schedule of duties on which it is to be based. It is idle to
attempt to discuss it without a definite proposal as to the subjects
of taxation and as to the degree to which those different subjects are
to be taxed. And the right hon. gentleman the Member for West
Birmingham, when he dealt with this question, felt that in common
fairness he must be precise and definite. We know what he proposed in
the way of taxation on corn, meat, fruit, and dairy produce. What we
want to know is this. Is that tariff before us now? Do the Opposition
stand by the right hon. Member for West Birmingham, or do they abandon
him? That is what the House and the Government want to know--and that
is what the Colonies want to know. It is indispensable to the
discussion of this question that there should be a clear statement
from the Leader of the Opposition whether or not we are to regard the
Glasgow preferential tariff of the right hon. Member for West
Birmingham as still current as a practical policy.
Then the House has been told that the Government might have given a
preference on dutiable articles. Such a preference would introduce
into our fiscal system an entirely new, and, as the Government think,
the wholly vicious feature of discriminating between one class of
producers and another. The whole basis of our financial and fiscal
policy is, that it draws no distinction whatever between different
classes of producers, whether they reside here or abroad, whether they
live in foreign countries or in our Colonies. I am quite prepared to
state that proposition in its simplest form. That is the fundamental
principle of our fiscal system, and there is no discrimination. We
have but one measure to give to those who trade with us--the just
measure of equality, and there can be no better measure than that.
We are charged with pedantry in dealing with the Colonial Conference,
through not making some concession upon existing dutiable articles.
The Colonial representatives, when they asked for a preference on wine
and tobacco, did not ask for it because it was of value to them by
itself. They knew well that the operation of such a preference must be
unfair and unequal. They knew well that Canada, which has the most
solid claims upon us for a preferential recognition, would receive no
benefit from such a preference. But the Colonial representatives of
South Africa asked for a preference on wine and tobacco in order that,
as they avowed with candour, we should "concede the principle." That
is a perfectly proper proceeding on their part; it is the natural way
of advancing the views which they hold, because it would lead up to
the larger principle and the larger policy.
But the Government are opposed in this case to "the larger policy."
The Government sit now on these Benches because they are opposed to it
as a Government and as a Party. It is one of the fundamental
conditions of our existence that we are opposed to such a policy. How,
then, by any process of argument, can the Government be censured for
not making an exception which must inevitably have led to and would
avowedly have been used for the breaking of the great rule to which
they have committed themselves?
It is a dangerous thing in this controversy, with the ugly rush of
vested interests always lying in the wake of the Protectionist
movement to be considered, to make even verbal concessions. Some time
ago I made a speech in which I said that there was no objection to the
extension of inter-colonial preference. By this I meant the reduction
of duties between Colonies which have already a discriminating tariff;
and it seemed to me in such a case that there is a net reduction of
duty to the good. I do not see any objection to that, because under
the most-favoured-nation principle we gain any advantage which is
gained by either party to the transaction. In any case, the sums
involved in inter-colonial preference at the present time are
extremely small, and, however that might be, the matter is one which
is wholly outside our control, because we have no authority over the
Colonies in this respect, and we may just as well look pleasant about
it and accord a sympathetic attitude to such a process.
Yes; but let those who reproach us with pedantry and with not showing
a sympathetic desire to meet the Colonies listen to this: When such a
statement is made by a Minister, is it accepted as a desire on the
part of the Government to extend sympathetic treatment to the
Colonies? Not at all. It is taken as an admission, and used for the
purpose of trying to pretend that the Government have abandoned the
principle of their opposition to the larger question of Imperial
preference. If, although we think them unsatisfactory, we were, out of
complaisance, to accord the small preferences suggested upon dutiable
articles, we should be told in a minute that we had given up every
logical foothold against preference, and that nothing prevented us
imposing a tax on bread and meat except our inability to follow the
drift of our own arguments.
I have referred to preference, but there is another proposal. The
right hon. gentleman the Member for St. George's, Hanover Square, put
forward a proposal earlier in the year, and it was renewed in a
slightly different form by Mr. Deakin[5] at the Conference. The
proposal was to impose a 1 per cent. _ad valorem_ surtax on all
foreign merchandise coming into the ports of the British Empire. That
is the proposal which has been put forward as the least objectionable
form of the preferential proposals, and it has been said of it that it
was the least objectionable because it gave no loophole for the
corruption which may spring up in the wake of the other proposals.