the way of national prosperity. A select committee of the House of Commons, appointed in 1820 to inquire into the prevailing distress and to discover remedies, found that British demands for light dues, port charges, and local and general rates were so great that English ports were shunned by foreign ships, and that foreign trade was rather tolerated than encouraged.' During the war a great effort was made to destroy the oversea trade of France; but this only resulted in war with the United States, and rendered still more necessary reciprocal arrangements with that country. The Navigation Laws had always been obnoxious to the American colonists. Huskisson now came to the conclusion that colonial prosperity was cramped and impeded by them; and the Americans themselves retaliated upon England by exclusive Navigation Laws of their own. The Commons' committee of 1820 found that the efficacy of protecting laws and discriminating charges was defeated the moment that other countries began to resort to the same measures.' Continental nations as well as the United States were resorting to the same measures in regard to the Navigation Laws; and, in recommending a relaxation of the British system, the committee selected shipping as the first trade to be dealt with,' in order that Great Britain might become an emporium of commerce. The Elizabethan policy had done its work. Other interests could no longer be subordinated to shipping. The central fortress of the protective system was successfully assailed.

No sooner was the Reciprocity Act passed than shipowners discovered that, as Baltic timber was kept out of England by a duty of 2l. 15s. per load, while colonial was admitted at 10s. per load, Germans could build ships at half the cost of English vessels; and that British shipowners were further handicapped by duties on sails, cordage, ship-chandlery, and dear food, as well as by higher interest and insurance charges upon the more costly British ships. The cheaply built and cheaply worked foreign ships reduced freights to the Mediterranean one half, to Europe generally one third, and cut into the Irish and colonial trades at one half the freight charged by British owners. This cheapening of transit benefited trade but hit shipowners hard. It was estimated that

between 1816 and 1826 the value of British tonnage fell from 127. per ton to 8l., and that this represented a loss of thirteen millions sterling; while the decline in freight represented a yearly loss of thirteen millions more. With both shipowners and manufacturers groaning under the high prices of a protective tariff, and finding it impossible to compete with the low prices of food and labour on the Continent, and with farmers ruined by high rents and low prices (for England) consequent on a succession of exceptionally abundant harvests, the whole protectionist system broke down. This was what forced from Sir Robert Peel in the House of Commons, in January 1846, the momentous declaration that,

'wearied with long and unavailing efforts to enter into satisfactory commercial treaties with other nations, they had resolved at length to consult their own interests, and not to punish those other countries for the wrong they were doing us in continuing their high duties by imposing high duties ourselves.'

Huskisson's reciprocity policy-freedom to negotiate, as Mr Balfour would say-had failed, as well as the protectionist system; and the Corn Laws were repealed, not merely because of the Irish famine-though that was the immediate inciting influence-but because British industrial and commercial interests demanded full liberty of expansion. They had already been nursed too long and could endure it no longer. Protective duties and the Navigation Laws, reciprocity and colonial preferences, all died together.

6

Free trade has certainly succeeded. The anticipations of the House of Commons' committee of 1820 have been realised. No longer Amsterdam or any other foreign city but London is the financial centre of the world. England has become the emporium of both Eastern and Western nations,' as Roger Coke saw that it might be with free ports; and our only fear now is that its great position may be successfully assailed. That it has not yet been successfully assailed is shown by Mr Schuster in his paper on • Foreign Trade and the Money Market,' published in the Monthly Review' for last January. The excess of imports over exports,' that alarms Mr Chamberlain, is, as

6

Mr Schuster shows, the measure of our prosperity, so long as our earning power through invisible exports is not decreased thereby.' If England is, without knowing it, becoming deeply indebted to foreign nations, then, indeed, part of the excess of imports may represent that indebtedness, and our commanding position may be in process of being undermined. Of such a disastrous situation Mr Schuster looks for evidence in the money market, where alone it could be found, but finds none; and, until some is found, his formula stands that the excess of imports is the measure of our prosperity.' With that measure no other nation can compare.

But nothing will satisfy Mr Balfour that our policy is wise unless other nations adopt it. In this attitude he turns his back upon past experience. But it should be some comfort to him to know that Germany has found it necessary to adopt free trade in ship-building materials in order that it may build cheap ships, while the United States have scarcely a native-built ship upon the ocean, because their protective system keeps them in the position British shipbuilders were in when Huskisson passed his Reciprocity Act. America was the power that, by retaliation, did more than any other to break down our Navigation Laws; and America has seen her ships swept off the ocean by free trade vessels. The essential conditions of industry and commerce have not changed since Sir Robert Peel discarded reciprocity for a policy of our own; and if, in specific cases, dumping or other exceptional conditions disturb the ordinary current of competition, retaliation is shown by our survey of our own history, and by the later experience of continental states, to be a two-edged remedy that may, perhaps, be used with effect, but may also be more deadly than the disease it is to cure.

If conditions of international competition have been only modified by the development of industries and the march of prosperity in other nations, there has been a distinct and marked change in the position and condition of the colonies. Free trade was an emancipation for them as well as for us. Mr H. E. Egerton, in his 'Short History of British Colonial Policy,' makes this clear. Lord Durham's liberal policy in Canada synchronised with the deliverance of the colony from the trammels of the British mercantile system. The Australian and New

Zealand colonies were still in their infancy, and had barely outgrown the associations of Botany Bay. What Parliament was concerned about in those days was the disposal of Australian waste lands and the application of part of the proceeds to the encouragement of emigration. The old plantation' idea had not wholly disappeared, and it was thought necessary to keep the colonies well in hand. Even so late,' says Mr Egerton, 'as the time of the Reform Bill, a Secretary of State could assert that the effect of allowing a popular Assembly in the projected colony of South Australia would be "to create within the British monarchy a Government purely republican.'

Mr Balfour and Mr Chamberlain think, as Lord Beaconsfield once thought, that the concession of selfgovernment to the colonies should have been accompanied by retention of effective control over their fiscal systems; but the whole history of the American colonies demonstrates the impracticability of such a policy. There were only three possible policies. The colonies could be left in the hands of the Colonial Office, or they could be allowed to manage their own affairs-which was what they desired -or they could have been taken into partnership with the mother-country, and given a share in the government of the Empire. But this was a policy that could not then be thought of; the colonies were still very young. Lord John Russell's anticipations have been fully realised. The colonies have grown up to be great kindred communities under local governments of their own, pursuing their own independent course of progress. and prosperity, and jealously maintaining the ties that by feeling and principle unite them to the mother-country. That this is not a final but a transition stage is true; and the future has to discover the means by which these ties may be even more firmly knit together, and a united Empire be found that, while independent in all its parts, shall be indissolubly one in dealing with the rest of the world. The solution of that problem will not be hurried. It is certainly not to be promoted by any attempt to stereotype colonial industries under the specious pretext of bestowing upon them preferential tariffs. They look, as we do, to progress over the whole field of social, commercial, and industrial life.

Canada's hope is not to see British manufactures mono

polising the Canadian market, but the manufactures of Canada ousting those of the United States from Canada and from other markets, including Great Britain itself. Canada is now approaching a position to command trade. Experts in the iron trade, who have examined the situation, are convinced that, in the assembling of the materials for making iron, there are centres in Canada that possess an advantage of $2 per ton over even Pittsburg itself; and that the iron districts of Cape Breton are more favourably situated than any others in the world. Unfortunately the Canadians have not yet the perfect equipment and high technical skill of the Americans; and, in spite of their more favourable position in regard to the raw products, they cannot yet compete with Pittsburg. But, given equal technical skill and equipment, if Canada were to take her courage in both hands and pronounce for free trade, there would be a fall in prices in Canada that would put American dumping out of the field, and would reduce the cost of machinery, and of railway construction, equipment, and transit, to such an extent as to give the Canadian farmers a larger advantage than they are ever likely to secure by preferential tariffs in the mother-country.

But Canadians are not yet ready for free trade; nor is the Empire ready for commercial, much less for complete political union. A patchwork of separate treaties between different parts of the Empire would not be union. That Canadians, Australians, and New Zealanders would welcome preferential entrance into the British market is no doubt true. It would be strange if they did not. But no colonial manufacturer or statesman has given any countenance to a policy that would subject colonial manufacturers to effective competition from Great Britain; nor are the colonies prepared to surrender one iota of their fiscal freedom for the sake of the commercial union of the Empire. Sir W. Laurier has not shrunk from asserting that he prefers Canadian liberty to closer Imperial Union at such a price. Professor Shortt of Kingston, Ontario, in his 'Imperial Preferential Trade from a Canadian Point of View,' demurs to any restoration of the old mercantile system under the guise of preferential tariffs that are to stimulate farming in Canada at the expense of colonial industries. The future