EMPIRE TRADE AND EMPIRE COUNCILS.

Dominion, Volume 8, Issue 2420, 27 March 1915, Page 25

EMPIRE TRADE AND EMPIRE COUNCILS.

W®A ©f Imperial Emewed,' [

Problems of Imperial commercial co-operation are discussed at length in a monograph issued last month by the Royal Colonial Institute. It is generally recognise d that the war'must result in placing Imperial relations on a new basis, and New Zealanders, who wish to keep themselves abreast of the wider questions of the day will find much to stimulate thought in this careful, survey of the present position in Imperial commercial co-operation, and the analysis of possible methods of'extending that co-operation. The writer is Mr. Frederick A. Kirkpatriek,' of Collr.idge, Ireland,_ .who is the first Gold Modallist of the Institute. , .We reprint-below his closing review of the situation.

•1. Commercial co-operation might merely take the form of continuing and amplifying that which is already being done' ih the way- of aiding communications through shipping lines,, postal' facilities, acquisition or laying of cables? of telegraphs, and similar activities. Suoh work does not. necessarily'demand a central authority, although it could be most effectively carried. on by such an-authority} either acting directly or serving merely as ail.advisory Board-for the several Governments. ' ■

•2. Fortified ports having any relation to commercial lines of communication inigiit be jointly garrisoned by tie States concerned, and the ; inter-State seas or oceans might be guarded by those States. Thus Australia and Britain might jointly garrison Singapore, Colombo, and Aden; .Canada and Britain might act together in Bermuda; Australia, New Zealand, and Canada in the Pacific. Such co-operation for defence of trade does not actually amount to co-operation for purposes of trade; but it is a step in that direction, bringing the States into close connection for purposes relating to trade. •

•-The naval part of this joint action is being actually carried out in the Pacifio in', some degree. Furthermore, communications are' passing between .Canada and Australia with a view to soma, kind of joint control in the Pacific; and it ".is noticeable that these, two Dominions' are negotiating a Reciprocity Treaty it the same time.

Such joint action in defence of trade ports and trade routes may be also a step in. the direction of joint, administration of dependencies, which' would bo both an economic and a political bond between the States.

: 3.' The State's, by sharing between them the cost of the Consular service, woiild be moving towards commercial cooperation, since the Consular service may be regarded as. in great part a world-wido bureau of commercial information. If the contributions of the States towards this and possibly other objects were handed over to the central authority, this would mean the oreation of'an Imperial Exchequer. The diplomatic service might be similarlv supplied. The maintenance of lighthouses outside territorial waters, the cost of Admiralty surveys and other such mat-ters-connected with'trade might similarly 'be apportioned between the States. Every fresh addition of financial business to the functions of the central authority would mean not only a piece of commercial co-operation but actually a step;'in the direction of fiscal combination.

4.* The creation of a Federal or inter-. State debt might be effected' either by pooling (wliolly or in part) the existing debts of the States, or else by combined borrowing for the purpose'of defensive co-operation. It has been' pointed out that; the raising of' loans and payment of interest is a branch of trade. _ The existence of a National inter-Dominion debt, borne in common by all the States, would; be a distinct form of -trade. Moreover, as Alexander Hamilton forein the case of the" TJnited_ States, such a debt would- be a tangible and effective aid to political •union. ..; The pooling; whether partial or . complete; of the : various State debts.' would;.'inerely mean an extension of that method of spreading out credit over -the; Empire, which has already *occaai'pnally practised. The variations' in icredit of the; Dominions would .'render; the 'initial negotiations delicate; . but; this' difficulty is not insurmountable, (a) . _ .:,

Oil the other hand,'the raising -''ofa new "Federal" or lmperial Joan would probably be the easiest:way to'st-art-a central' Exchequers—the loan to be applied to defensive ."Imperial purposes: and the raising- of a iiew loan, might possibly prepare.'the way*' for a pooling of. State debts.- In -any case, the • management • of ' the : :; ; debt, the - receipt of the interest' / ifomVthe various ; State Governments andfits'ipayment. to the individual 'creditors f .woiild -he--come part of the ,'business , of'the central body. Moreover-the- existence of such a debt might 'conceivably render possible the receipt of a- small direct tax by the central authority through the'payment of a. fixed-Imperial 'income lax. on the interest, such Imperial in:ome tax to be in the several (b) ' Any further -fiscal arrangement Would necessarily ho a matter ,of caution's and gradual experiment. But in ;\ny case the existence of .a. central Exchequer, the constant publication of its {nancial activities, and- the holding, of mperial Stock by citizens of the sev-. >ral States, would constitute a valuable material support to.united' action.

5} Navigation laws iaust be mentionEd : as being at all" events a theoretical possibility—that is'to say.'laws designed to favour the use of national slipping in inter-State trade. The restriction of inter-State trade to national shipping is out of the question under _ present conditions. But some discrimination in favour of national shipping was actually recommended in the following resolution passed by the Imperial Conference of 1902: s

"TTiat the attention .of the. Governments of the Colonies and of the United Kingdom should be called to the sent state of the Navigation Laws in the Empire and in other countries, and to the advisability of refusing the privileges of coastwise trade (including trade between the Mother Country and its. colonies and possessions, and between one colony or possession and an-

(a) The Australian Commonwealth by taking over the debts of . the six Australian States is perhaps making experiments aud setting an example to the Empire, as in other Matters. "In the 'Budget statement which was presented to'the Federal Parliament at yesterday it was announced that the Government proposes to introduce a bill for taking over the Slate debts as they mature, but leaving the States "free to borrow for themselves. The Commonwealth may, however, also borrow on their behalf."—"Tho Times," October. 3, 1913.

Ib) Such an income tax- would, of .course, require the consent of the several States; perhaps also it would require the holding of - certain proportions of the Imperial Debt by Coriwrations, individuals, or public' authorities in the soveral States. Such would be difficult, butpro- • b»bly wot impracticable.

other) to countries in which the corresponding trade is confined to ships of their own nationality ; and also to the laws affecting shipping, with a view of seeing whether any other steps should be taken to promote Imperial trade in British vessels."

This resolution was re-affirmed, Great Britain dissenting, ih the Conference of 1907.

6. At various Imperial Conferences the following suggestions have been made about co-operation in matters of trade:—Uniformity in the laws of copyright, of patents, of,trade marks, of companies; uniformity in the law of compensation for accidents; an Imperial Postal Order system; a uniform commercial code; uniformity of. merchant shipping laws; uniformity of statistics j an All-Red cable linking all the Dcmimons. /

The Congress of. Chamber of Commerce of the Empire, sitting at Sydney in 1909, passed resolutions in favour of an Imperial Council for the promotion -of inter-Imperial trade, btate-aided immigration to the colonies, uniformity, of weights, measures and currency, joint conciliation and arbitration boards for wages disputes. 7. A, system of Preferential Tariffs is what is usually meant bv "Co-opera-tion for purposes of trade?' The pioneers of systematic/colonisation and colonial automony—Wakefield and his school—expected permanent Free-trade within the Empire as a matter, of course; and Lord Durham in 1839 actually, advised that Great Britain, should retain-, of Canadian external trade. But it was soon seen that the tight of imposing taxes in any form, whether for revenue or for protection, was an essential part of autonomy, and that this right would be nullified by exemption to: British imports. In 1872 Disraeli said: — "Self-government ought to have been accompanied by an Imperial tariff, by securities _. . . for the enjoyment of unappropriated lands s ,.and, t by 5 a military; code (defining ■ defens'ive/ : ;afra'ngements) . . . and by the institution of some representative council in the metropolis.! which would have brought the colonies into; constant and continuous relations with the Home Government." . :V/ ; i ! * Colonial v and imperial; Conferences, At the first Colonial Conference, held in London iri 1887, Sir "Samuel Griffith, as delegate for Queensland, submitted the following proposition: 'That if any member of - .the Empire- thinks fit for any reason' to impose .'customs charges upon goods imported i from abroad, it should be-recognised .that goods coming, from British possessions should be subject to a lighter duty than those coming from foreign possessions!" Mr. Hofmeyr, speaking on behalf of Cape Colony, brought forward the proposal which is mentioned.on page 26; — "To discuss the feasibility of promoting closer union between the various parts of the British Empire by means of an Imperial Tariff, the revenue dorived from 6uch tariff to bo devoted to the general defence of tho Empire." The proposal was made with two objects, "to promote the union of the Empire and at the samo time to .obtain revenue for purposes of general defence."

No. . formal resolution waff brought forward; but; the preferential arrangement suggested by these two speakers was warmly supported by the delegates •from,- Victoria, South Australia, Ncwfouhdland, ■ New Zealand, and' Natal. Mr. ex-Premier of Victoria/ while"avowing himself a Free-trader/do-', scribed Mr.. Hofmeyr's speech' ..as'/.' a"noble'speech," and said, "If, we could have a recognition throughout the Empire that. ,4he: products of the' various dependencies-would be treated on- a'different footing from the products ■ of foreign countries, I should be/indinefl to regard very favourably such a proposal." Sir R. Wisdom, delegate for New South Wales, expressed . great in-, "te.rest in the, discussion, but added "The, delegates of New South' Wales consider , that- the question ' is' outside the l limits of-discussion as laid down-iu Mr. Stanhope's dispatch, and that as it seems to them to , have an/intimate connection with the wider subject of' political federation, they are precluded by their instructions from-dealing with it." \ • Mr. Adye Douglas, Agent-General for Tasmania, urged that agreement' between the Australian colonies as to tariffs was a necessary preliminary to any gonoral proposal. He added:—"l only hope that the effect 'of this discussion will be to induce Australasia to act as one; and then we can -very' well come to England, who imposes no duties uponany of our goods, and ask her to agree to such a echeme as this." At the second Colonial Conference, held at Ottawa in 1894", the following resolution was passed, eight delegates voting in favour of it, and three voting against:—"That this Conference reoords its belief in , the advisability of a Customs arrangement between Great Britain and her colonies, by which trade within the Empire may be placed on a more favourable footing than that which is carried on with foreign countries."

In 1897 the first Conference of Colonial Premiers was held in London. Two resolutions were unanimously passed : the first urged the denunciation of any treatios hampering the commercial relations _ between Great Britain and her colonies:, the second was worded thus: "That, in the hope of improving the trade relations between the Mother Country and the colonies, the Premiers present undertake to confer with their colleagues with the view to seeing whether such a result can be properly secured by a preference given by the colonies to tho products of the United Kingdom.". ,In accordance with the first resolution, the Imperial Government denounced the commercial treaties then existing with Belgium and with Germany.

-At the Imperial Conference of 1902. the following resolution was passed unanimously:—.

I"That tlii? Conference recognises that the principle of preferential trade- between tho United Kingdom and His Miiestv's Dominions . . would stimu-

late and facilitate mutual commercial intercourse, and would . . ; strengthen the Empire . . . That, with a view to promoting the increase of trade within-the Empire, it is desirable that those colonics which have not already' adopted such a policy, should, as far as their circumstances permit, give substantial preferential treatment to the products and manufactures of the colcinies' ..."

At the Imperial Conference of 1907 it was proposed to re-affirm the resolution of 1902, with an addition extending the preferential proposals/so as to include trade between the" self-governing colonies, and with another definite addition: "That it is desirable that Uie United Kingdom grant preferential treatment' to the products and manufactures of tins colonies." The oversea, delegates were generally in favour of this proposal; but the British Ministers dissented. Finally, the resolution of 1902 was re-affirmed, Great Britain dissenting by means of a reservation. In addition a colourless resolution was .unanimously adopted:-— ' '111 at efforts :in favour of British manufactured goods and British shipping should be supported as far as possible." ~ At the Imperial Conference of 1911, the Dominion delegates showed them- ■ selves favourable to commercial co-oper-ation, but no other resolution was passed on the matter. Howe'ver, the Conference recommended the appointment of the "Dominions Royal Commission" mentioned on pa go 82. Chambers of Gommeroe. - The fourth Congress of Chambers of Commerce of the Empire, - which met in London in 1900, passed' a resolution that "an advantageous commercial bond is one of the strongest links in national unity." ' The fifth Congress, held at Montreal in 1903, passed a unanimous resolution: "That ill the opinion of this Congress the bonds of the British Empire shall be materially , strengthened and a'union of the various parts of His Majesty's Dominions greatly consolidated by the adoption of a commercial polity based upon the principle of material benefit, whereby each component part of the Empire would receive a 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." Tlip sixth .held in London in 1906, re-affirmed the/resolution of 1902, adding :'."There are ; in the United' Kingdom, her colonies and dependencies natural resources andindustries,' which, if developed;', would be sufficient':to/provide the British Empire'with 'its feed-supply and all. other necessaries and ments of'life." . . . The Congress, urged preferential treatment on a reciprocal basis, "believing that thereby the bonds of union/will be strengthened and the British, Empire largely freed from dependence on foreign countries for food and other supplies ; it was added "that this matter is of present practical importance" : 105 Chambers voted, for the resolution, 41 against; 21 were neutral. At the seventh Congress, held in Sydney in 1909, the resolution of the sixth Congress was re-affirmcd on the motion of the London Chamber of Commerce: 52 chambers voted for the resolution, 7 'against; 17 were neutral. : The eighth Congress, held in London' in 1912, "re-affirmed its opinion in favour of preferential tariffs': 87 chambers voted for 'the resolution, 9 against; 33 were neutral. ■ ' Movement Towards Preferenoe In the Dominions. In . 1897 Canada granted to British goods a,preference of 12} per cent., which' was at, the same time apparently "offered to any country which might grant compensatory advantages .to; Canada. But in 1898 this tariff was repealed, and replaced by one granting preference to countries of ,the British Empire, only. And iri 1900 the prefer-, ;enee .so granted was increased from onefourth .to ' one-third.' Moreover, New. Zealand, .Australia, and South Africa (c) have-followed the. Canadian example. .The-present .working.'of Preference is summarised in. the following paragraph: "In" 1898 Canada- granted a special rate to' British products. Since 1907 she has had a complicated' preferential tariff granting, an average reduction of duties of .about 2S per. cent.' to the Mother/ land. In 1903 New Zealand followed suit, and now Australia and the Union of (South' Africa have similar arrange-; ments. In New Zealand Preference ■takes the 'form' of a surtax upon nonBritish goods. South Africa gives a rebate to British, Canadian, and Australasian imports. ' Australia has a double] tariff, favouring British imports. Latterly, moreover, the Imperial trade relationship has been strengthened •on this hemisphere by the Canadian-West Indian agreement, the most important part of which provides for preferential reciprocity in Canadian flour and West Indian sugar."—"The Times," 1913. Thus within the last decade a network of preferential 'arrangements has been established, which will shortly be extended by reciprocity between Canada and Australia. It should be added that in the Canadian general election of 1911 the Canadian people decisively rejected a reciprocity arrangement which had been negotiated between Canada and the United States and had been approved by both Houses of Congress at Washington. Movement In Creat Britain. In 1902, a small "registration duty" 1 was imposed on corn and flour imported into Great Britain. Canada protested against the application of this duty to Canadian products, and intimated that she was prepared to increase the preference already granted ,to Great Britain in return for exemption from this tax, but urged that-, in any caso, Canadian flour and corn should be freed from duty,-whe-ther by preferential exemption or by remission of the tax. The Secretary fo.- the Colonies, Mr. Joseph Chamberlain, desired the continuance of the tax on foreign corn and flour, with exemption for Canadian corn and flour. But he.failed to, persuade the Cabinet; and the Budget introduced in April, 1903,. repealed the tax. A month later Mr. Chamberlain, in a speech at Birmingham, urged that Great Britain should enter into a preferential customs arrangement with the Dominions.

te) It seems doubtful whcthor South Africa will continue this arrangement. But the action of the three other Dominions is sufficiently remarkable.

But he complicated and confused this proposal by urging that through a modification of her hscal policy concerning foreign imports Great Britain might resume her ''power of negotiation, anil, if necessary, retaliation." In September, 1903, Mr. Chamberlain resigned office, on the avowed ground "that for the present, at anyrate, a preferential agreement with our oolonies involving any new duty, however small, on articles of food hitherto untaxed, is

... . unacceptable to the majority in the constituencies." Since that date tho agitation for "Tariff Reform" has been vehemently pursuer; but, since inter-State policy is not the sole motive of that agitation, since "Protection" and "Retaliation" are proclaimed as motives with at least equal prominence, therefore that agitation has confused the issue presentd in this thesis, (b). Meantime, public opinion in the Dominions seems on the whole continuously favourable to a Preferential Customs arrangement. It seems therefore desirable to examine this paitieular form of commercial 00-opera-tion in itself, apart from the general question of protective or retaliatory tariffs.

A Preferential Tariff scheme does not necessarily imply Free-trade witmn the Empire, although it may be a step in that direction; it merely implies a limited Customs Union, imposing upon imports from abroad duties exceedini; those imposed on' imports from States belongmg to the Union. TTie problem ot framing tariffs would be extremely djfficult. It could only be done by tentative and gradual steps, and the effects could only be known by experience. But ostensibly the greatest difficulty in the way is the reluctance of Great Britain to modify her established system of customs for revenue only. Yet perhaps this difficulty is not so great as might appear, since those who cling closest to non-taxation of imports have completely abandoned the abstract principle on which that system is based — the principle, that is to say, of free contracts and non-control of distribution, (e). The principle of non-control of production, which was once regarded as a part of Free-trade policy, has long been abandoned.

. Thus it is very probable that gradual and almost imperceptible movements in the direction of preferential tariffs would_ have been received in the same way in which gradual steps towards of distribution have been received, that is to say' Bbmetiraes with initial-protest, sometimes with indifference, usually wth a kind of experimental - acquiescence. The campaign for a ! reversal of our customs system natur-ally-alarmed and alienatei 'the public, since.,.it is well known 'that:, large and sudden changes affecting industry and trade; have the effect of revolutionary shocks, whatever the merits or demerits of such changes may be. In any case they cause immediate difficulty by upsetting arrangements based on existing For . /instance, tho pe'aco of 7815 was followed by a period of great econom'io unrest and suffering. Thus the notion of inter-State preferential tariffs has been damaged and discredited through being adopted as part of the programme of one political party. The proposal has been blurred and adulterated by enlisting the support of those whose aim is protection, or retaliation—partisans whose predilections have no necessary connection with inter-State policy. -Indeed it is probable that the phrase "Tariff- Reform" to-day rather suggests the policy of Protection as opposed to that of Customs for revenue only. Moreover procedure by public agitation after one rebuff, in place of patiently awaiting _ later opportunities of small introductory . experiments, nas had the effect of dividing the advocates of "Tariff Reform" upon the question of taxing food imports. This division offers some hope that the confusing agitation for Tariff Reform .may be dropped by political leaders as a necessary preliminary to the tentative evolution of one'distinct • point— commercial co-operation, with the Dominions.' This point should be clearly separated from the general- matter of Tariff Reform.

Analogy supports.-the argument for the possibility of gradual tentative steps xather than large revolutionary movements. For .both political parties have by turns infringed the principle of freedom of contract in doing business with Dominions and dependencies. Both have pursued the policy of development by chartered -companies, (f) of Stateaided railways, of mail and telegraph subsidies'. It was the party chiefly connected with Free Trade, which pledged the credit of Great Britain in aid of Canadian loans,in 1868 and 1873, and in aid,of .a South African; loan, in 1909. Supposing the Government in 1873 or 1909 had proposed to guarantee payment of interest on all the debts of the Dominions, a storm would have been raised at least equal to that which has raged round the question of preferential tariffs. The obvious lesson is in statecraft to proceed by inches, to avoid large generalities, and rather to win'one'6 way by particular measures appropriate to special occasions.

This particular proposal for commercial co-operation has been treated more fully, because it has been so much discussed in recent years, and is probably often regarded a 6 being'the only form of commercial co-oper/ition. It has been made tho subject of much rhetoric, muoh theorising, and much conjectural prophesying. For the sake of clear notions, emphasis should be laid on the following points:—

(a) A system of preferential tariffs is not the only possible form of commercial co-operation. (b) A system of preferential tariffs implies some taxation. (c) A system of preferential tariffs should be oxammed solely from, the point of view of inter-State policy, that is to say, solely as a method of commercial co-operation which might facill-

(d) The question of retaliation is not wholly irrelevant, since Germany pcimlieed Canadian goods owing to the preference granted to Great. Britain, and it was suggested that Great Britain should in turn penalise German ira porta. But this incidental "retaliation" is a different matter from retaliation regularly used as a diplomatic weapon in European negotiation. Such retaliation hft6 nothing to do with Colonial Preference.

(e) Under' present conditions tho State has come to have, either directly or indirectly, a "cry large measure of control over the management of railway companies. It can dictate methods of raising capital, tho charges'to the public, hours of labour, even to a considerable extent rates of wages, and methods of working tho tr<iflic.-"The Times." 1913.

(f) The Chartered Company of North Borneo received its charter from a Qladatonian Government.

tate political union and defensive combination. All' arguments concerning Protection and Retaliation should be ignored for the purpose of the present inquiry.

Merits of the Question of Preference. Since to many minds the phrase "cooperation for purposes of trade" probably seems to denote simply preferential tariffs, some will doubtless interpret this theme as demanding whether preferential arrangements are an indispensable part of defensive co-operation. But that is not a scientific interpretation of the theme. The jtre-Bent writer has stated his conviction that defence cannot be dissociated from foreign policy, end that commercial policy, in one aspect, is a branch of foreign policy: thus defence capiot be dissociated from commercial policy. Accordingly, any authority which guides defensive policy must in some degrees guide foreign policy, and by implication, commercial policy also. But any attempt to forecast the line of commercial policy which shall be followed in the future by that authority would be as vain as an attempt to forecast the future strategical arrangements or the future diplomatio engagements of a united Empire. PolJpy , a U these three departments must be designed to meet surrounding conditions, and must be constantly adapted to meet changing conditions. 'Defensive or strategical policy depends on tho strength and _ the probablo . amitjy or enmity of foreign powers. Foreign policy must be shaped to meet the foreign policy of other nations. So also with regard t-o commercial policy, no certain course can be traced for the future. Two conditions, which overlap one another, .seem necessary for the adoption of a. preferential arrangement, first the continuous desire of the Dominions for preference;' secondly, the continuance among other nations of their present protective system. It is already a matter for discussion what effect the recent .reduction of United S'tateß tariffs will have on the preferences actually prevailing within the Empire.; and it is evident that any adoption of ,a system of free imports by foreign nations would alter , the whole basis underlying the colonial desire for .preferential arrangements. ■

The present writer believes, that, pre-fiupposmg the continuance of protection among foreign nations, the Domuuons, growing m population and still more in strength and digntv, will succeed in persuading Great Britain to enter into a preferential arrangement and to impose differentia] duties on foreign imports. Two precedents support this opinion: New South Wales, for the sake of Australim unity and defensive strength, waived her predilection for freo imports. Yet the unity so attained by abplishing inter-State Customs, was a triumph for Free-Trade, even though Australia, internally a vast Free-Trade area, imposes protective Customs duties. Again, at the Imperial,' Conference of 1911, Sir. Asquith said: "For what dees Sir Joseph Ward's proposal come top I might describe the effect of it, without going into details, in a- couple of sentences. It would impair, if not altogether destroy, the authority of the Government of the United Kingdom in such grave matters as the conduct of foreign policy, the conclusion of treaties, the declaration and maintenance of peace, or the declaration of war, and, indeed, all those relations with foreign Pow- : ers, necessarily of the most delicate character, which are now in the hands of the Imperial Parliament. That authority cannot bo shared, And the,coexistence, side by side with, the Cabinet of the United Kingdom of this proposed body-^—it does not matter by ! what name you call it for the moment—clothed with the functions and the jurisdiction which Sir Joseph Ward proposed to invest it with, would,' in our judgment, bo absolutely fatal to our present system of responsible government." ~

Yet it is known that in the secret sessions of' that sometimes consulting with; tlio /Committeeof Defence; 'tiie approval - of- ; the; Over: sea Premiers was sought and obtained' for the foreign policy, of the Empire. And in the 'following, jear (1912) certain Dominion Ministers, visiting London, were taken into ,the confidence,of tho British Ministry in i-most intimate and effective ■manner/ ,>'Thus, concern-'. ing foreign policy, an'influence which was formally/denied t< the Dominions in 1911 has been in some degree tacitly conceded to them, ; Accordingly, it seems probable that-their 'influence,..patiently ami steadily brought to ■ bear,' must similarly tell on the commercial side of foreign policy. For every distinct political entity speaks with a force -which has little to do with'counting: heads. Canadian opinion, for more than a century, has had an influence on Imperial history altogether disproportionate to tho population of Canada The same thing is true, in recent years, of New Zealand.

But tliis question as to future commercial policy is hypothetical; for the future attitude of the Dominions must depend on the attitude of foreign Powers. Yet this point does not affect the conclusion already reached, that the bodv which guides defence must guide f<,reign policy, and, in some degree, commercial policy also; and this constitutes co-operation for purposes of trade. In short, foreign policy, defensive policy, and certain branches of commercial policy are not three different- things. They are parts of the same tiling, the conduct of international relations. And the authority which handles international relations must handlo each of these three things. Administrative Problems, The question of commercial co-opera-tion is part of the wider subject of joint political action. Accordingly an analysis of methods of commercial cooperation would be incomplete without indicating the possibility of such, joint administrative action as may give permanence and regularity to commercial co-operation. It is not necessary to define precisely any form of administration, or to say "tho thing must be done in this way." It is enough to say " the thing can be done in some such way as this," to indicate some practicablo method, to shov that the thing is possible. It has been already pointed out that an inchoate certral administration seems to be already in existence in the form of the Imperial Conimittee of Defence and 1 tho Imperial Conference, these being institutions "ijhich may proceed either by self-dsvol-

opment or by -laying the foundations of something further.

It was said in. the introduction to the theme, "Both Schools cannot bo right" (g). This means, "Both Schools cannot be ultimately and permanently right." If a complete system is to bo forged all at once, if the defensive scheme of the Britannio lands is to emerge full-grown and clad in panoply, then one or other of the two alternatives must be chosen. But that i 3 not the British method. The British Constitution -was not forged on a single anvil at a given time. Our present relations with the Dominions were not laid down by any group of statesmen at any given time. These are matters of constant growth, experiment, and-modifica-tion in spirit, if not in form. Thus, for purposes of immediate practical application, tho school which excludes trade' from the purview ;of .the central body may be immediately right, even'if mistaken as to the possibility: of making this exclusion permanent, and final. Sir Joseph Ward himself - indicated in 1911 in what way this 1 , problem may be worked out; for he is prepared -to compromise with conservative opinion by taking what he can get,' limiting the functions of the central body at first.In such matters it is essentially and literally true to say "The half- is greater than the whole"; for the whole is an unknown quantity, indefinable and therefore at first unattainable. ' The half, once achieved, indicates .what the whole, shall be, and gradually leads to its definition and achievement. The precise powers of the central body need not at first be defined. British, experience seems to indicate, that this body should at first be in the nature of a ''Convention," to confer, to consult,,to recommend, and so to guide policy, (b.) The central body will be in constant communication with the Executives of all the self-governing States. In . case ,of urgency it is possible for all the Dominion Cabinets to sit simultaneously in their ■ respective capitals and to hold hourly communication with the central body. At the present time a telegram ■ dispatched from the Liverpool Cotton Exchange to the, Chicago Exchange' receives a, reply within six minutes, and there is no reason why such prompt methods, of business should not be adopted in public affairs, (i.)

But such urgency is exceptional. As a rule, agreement may be reached by more leisurely paths. The central delegates, after discussion and after watching the experiments which are actually in progress, may report their conclusions to the several States, to be examined by the Cabinets, and, in necessary cases, to be submitted to the Legislatures. . It may be objected: ''Agreements so reached are merely treaties between States: they do not constitute real continuous trade co-operation. For each agreement requires the assent of each "State: thus by withdrawing this assent, any of the States may at any time undo the agreement." There ;is, of course some force in this objection; for it is easy to find flaws in any system. The object of statecraft-is- to find the line of least resistance, since perfection is unattainable. The objection, may be refuted by pointing out that such agreements would differ from international treaties in'two ways:—

1. The agreement would be a group of -treaties between half-a-dozen States already joined in one political'bond. 2. The threads of this web of treaties would be in the hands of a central body, holding authority from all the States. Thus the States would not be merely negotiating severally with one another. Rather they .would meet for negotiation in the persons of their representatives.

The stability of this method would.not be affected by the fact that a commercial arrangement so established might be modified or replaced or -annulled af-r ter experiment. Any legislative or executive regulation in any State is liable to suoh changes and regulations concerning the exchange of commodities es. ■pecially demand perpetual; watchfulness and occasional adjustment. "..Through the action of 'the central body, "consulting with the several State's, such modifications could be effected in \the .cautious manner already indicated. "This constant -watchfulness?and guidance' would, in fact, bo a part of: commercial : cooperation through a central body. ' -, It may bo added , .-that' logical completeness and • homogeneous sym-. metrv are not essential to a working arrangement.' - : Bavaria,- Wur.temburg, and Hamburg bear different relations to " the Gernianio Federation; and there'are differences in tho relation of the Cainadian 1 provinces towards the Canadian Federal Government. (j). - • ■ It may be thought that this method of guiding commercial: policy as a part Of foreign policy is impracticably cumbrous. It would probably _ prove less cumbrous and less impracticable than the-method now pursued in the United States, where foreign policy is conductel by two separate and often discordant authorities, the Executive and the Senate. In the British States, since Ministers sit in Parliament and are responsible to Parliament, the functions of Government overlap. Each Cabinet is in constant touch and necessarily in agreement with its Parliament. In turn, the central body would be in constant touch with the Cabinet of each State. In fact, as Seeley has pointed out, a British Cabinet is really the law-mak-ing power as well as the treaty-mak-■ ing power. This combination of functions in the Cabinets would much facilitate the working of an inter-State system for purposes of foreign policy,, including trade. i Exeoutive Forms, Any attempt to define the form of tho central authority would bo' premature and inappropriate. Attempts at definition have been made and have been dropped. For instance, the proposal of colonial representation in the existing British Parliament has now been generally abandoned. At the Imig) "United Empire." March, 1913. (h) Judge J. A. Jamecon, in his book "The Constitutional Convention," reckons 152 Conventions in the United Statee— mo6tly State Conventions—between 1775 and 1864. (i) fl"hilc the Commonwealth BUI was heinn considered in London in 19C0, the Australian Premiers were sitting in Conference at Sydney end were consulted by telegraphic dispatch. (j) Toronto, October 24, 1913—The InterProvincial Conference begins at Ottawa on Monday. . . . Alberta will suggest

that all three prairie provinces should have control of land, timber, minerals, and other natural resources, so as to be on an onual. footing with the older provinces.—"The Times.-

perial Conference of 1911, Sir Joseph Ward proposed an elected' Parliament of 300 members, an elected Imperial Council of Defence or Council of State or Senate,, consisting of 12 members, and an Executive of 15 members. His scheme received 110 support in. the Confernce. Dr. T. J. Lawrenco suggests a small central bodyi to inolude "among othors the British Prime .Minister and Foreign Secretary . . . with a representative of the Ministry of the day in each of the , . . Dominions-". Mr. Sidney Low lately discussed, the possibility of a "Federal Congress" : (k) but' rather . suggested the probable' development of existing arrangements, notably the Imperial Committee of Defence and the Imperial Conference., Mr. Borden, in a Terent speech, takes the same line, and dwells upon the need of. cautious and gradual development: "Mr. Borden emphasised the importance of the Imperial Defence Committee. and, explained at length its powers and responsibilities. He insisted that' it was the conclusion of those who had most closely studied the subject that for the present the necessary concultation and 00-operation between the Governments of the Dominions and the Government of the Mother Country in respect of Imperial defence and foreign policy could most effectively and securely.be had through the medium of this, committee. He added:" Already Ministers frorii various Dominions have been • summoned to its meetings.,' Five Canadian Ministers were present at-one meeting in 1912, and two Canadian Ministers were summoned during the present year. No one would pretend that the presence of a Canadian Minister in Ldndon to attend the meetings.: of the committee and to consult with the, British Prime Minister'and, the Foreign Secretary upon matters of foreign policy would embody a filial-solu-j -tion of the great problem that confronts us. .But the genius of cur race is to pnweed- in such matters slowly and cautiously, and to depend for-re-sults rather upon experiment and'experience than upon-logic. As I took occasion ■- to say last year in England,. Canada will not,be merely, an adjunct even of the, British' Empire; but we have no' desire . to; force' the pace, unduly: we-know we must-creep before we walk."—"The Times," 1913.. " Evolution of Federal Arrangements, In fact, ! we. are watching a .process of evolution .which-may be, said to have begun with the Confederation of the New England Colonies-in 1643; and whioh, after various proposals, and tentative efforts, Teached its first definite stage with the formation of the United States, Government in 1788. Then came in succession tho three British movements of union, namely : The fojmation of the Dominion of Canada/ the Commonwealth of Australia, and the Union of South Africa. Everything points to a continuation of this process of ero lution, whereby a closer union may be effected between the' States thus "severally consolidated' in themselves. . .In every one of those four unions' there was an intermediate stage of experimental and incomplete combination; am-' in each case the way to closer union was found by, means of consultation. in Conferences and Conventions. Thus the, probable future path seems to be indicated by experience. ■n"*!. Kins'* College Lectures on Colonial ■Problems, 19J3. .