THE July number of the Edinburgh Review contained an article entitled 'Lord Milner and Canadian Preference,' in which, in addition to the familiar general arguments of the Free Importers, an attempt was made to prove that the preference accorded in the Canadian Tariff to goods of British origin was of little or no value. The reviewer selected as his text certain sentences in a speech of mine, which, taken out of their context, made me to appear to say something I never intended. The personal controversy between myself and the Edinburgh is a matter of small importance; neither am I concerned to answer the general arguments of the article, with one exception. But the question of fact, whether or not Canadian preference has been of value to British trade, is a matter of such immense importance that I am not content to leave unchallenged the statement of the case presented by the Edinburgh. I hold that statement to be absolutely misleading. I believe that the figures, when closely examined, leave no room for doubt that the preference has been of the greatest value. I have unfortunately been prevented by other work from giving as much time as I should have wished to the elaboration of the following tables VOL. LXIV-No. 380

525

NN

before going to Canada, as I am just about to do for some months. But, though with more time I could have made the case still stronger, I venture to think that even the statement here presented is sufficient to dispose of the statistical portions of the Edinburgh article. Therefore, as the question is a burning one, and as I am convinced that the loss of the preference, which is seriously threatened by our vaunted policy of 'slamming, barring, and bolting the door' in the face of the oversea Dominions, would be a national disaster, I think it desirable to call attention to these figures without delay. They speak for themselves, and I will confine my comments on them within the smallest possible compass.

First of all let me deal with the one general argument of the Edinburgh Reviewer to which it seems necessary to refer. That writer makes great play with certain large figures illustrating the growth of the population, revenue, and trade of the United Kingdom during the last century. Our imports,' he says, are more than seventeen times the value they were in 1825, and our exports are nearly nine times as valuable as in that year.' In the absence of comparison with the corresponding figures for other countries how does this prove our fiscal policy to be wise and theirs foolish? These figures may indeed make an impression on the unreflecting. But it is not difficult to produce figures showing an even greater expansion in the trade of countries which have a system of protection. I can illustrate this by applying to Germany and the United States the tests of increased population, foreign trade, and tax-revenue which the Edinburgh applies to the United Kingdom. This is done in the following table, which compares in the main the changes between the years 1871 and 1906.

COMPARATIVE STATISTICS OF PROGRESS IN THE UNITED KINGDOM, GERMANY, AND THE UNITED STATES, 1871-1906.

The Edinburgh Reviewer desires me to feel reassured as to the progress of the United Kingdom, because its population has increased

1 S. Rosenbaum on Food Taxation in the United Kingdom, Germany, France, and the United States,' Journal of the Royal Statistical Society, June 1908.

by 13,200,000 in the last thirty-five years, and he asks me to accept this growth as a final proof of the great wisdom of our fiscal system; but then I find that in the same period the population of Germany has grown by 20,300,000, and that of the United States by 44,600,000. Nor do his comparisons of trade figures carry any greater conviction to my mind. Taking the figures of 'special' trade, instead of those of 'general' trade referred to by him (not because these figures better confirm my case, but only because they are more readily obtainable in a comparable form for different countries), it is doubtless a sign of progress that our imports for home consumption have increased by 253,000,000l. and our exports of domestic produce by 144,000,000l. in the period 1871 to 1906. But as an argument for the superiority of our fiscal system even these large totals fail absolutely when we look at the yet larger and more striking totals on the other side. The exports of the United States have increased by 280,000,000l. in the same period of thirty-five years; while German imports have increased by 281,000,000l., and exports by 179,000,000l. in no more than twentysix years (comparable figures for years before 1880 are not available). Perhaps the Edinburgh is right in placing the British increase to the credit of the British fiscal system. He must, however, if he is consistent, place the greater increase of Germany and the United States to the credit of the fiscal systems of those countries.

In the following table the above figures are restated in a somewhat simpler form. Instead of absolute values I give here the percentage increases of the population, tax-revenue, imports, and exports of each of the three countries. They show that in the period under review, with a free-import fiscal system in the United Kingdom and a protective system in Germany and the United States, the progress of the United Kingdom has been surpassed to an extraordinary degree by that of the other two countries.

INCREASES (PER CENT.) OF POPULATION, REVENUE, AND FOREIGN TRADE IN THE UNITED KINGDOM, GERMANY, AND THE UNITED STATES, 1871-1906.

How can it be contended that these figures prove the superiority of the British over the German system? Personally I should be most reluctant to attempt to draw any conclusion as to fiscal policy from these unanalysed totals. I deprecate the superficiality of that form of argument. But if it is sought to use the increase of the population

and trade of the United Kingdom as an argument for Free Trade it is, at any rate, reasonable to point to the even greater increase in the population and trade of Germany to show the futility of such reasoning.

With that remark I will turn from the general arguments of the article to the portion which is of more immediate importance— the attempt to show that I drew unjustified inferences from the statistics of Canadian trade with reference to the value of preference. A great many figures are quoted from Canadian and British Bluebooks to prove that preference is of little or no value. The principle underlying the selection of these figures is frankly stated at the outset. 'In dealing with commercial statistics,' the reviewer says, the late Lord Salisbury's advice "to take wide views and to consult large maps" especially holds good.' With all respect I demur entirely to the principle and to the analogy on which it is based. The reason for consulting large-scale maps is that they enable us to realise important geographical details which are less visible in maps drawn on a smaller scale. But the effect of studying the trade of a country, or indeed any statistical material, in huge unanalysed totals is to obscure essential details. Commercial statistics in a mass can be manipulated to prove or disprove anything. But when you come to examine them closely and in detail they are less pliable.

In the speech which the reviewer criticises I was attempting, no doubt very imperfectly, to examine the effect of preference, not upon the total trade of Canada, but upon those classes of imports into Canada in which the United Kingdom is principally interested, and upon the competition between us and our chief commercial rivals in supplying Canada with these articles. That, as it seems to me, is the thing which matters to us. My contention was, and is, that since the introduction of preference we have been gaining ground in that competition, whereas before the introduction of preference we were losing ground. If that is true, then it is immaterial that Canada imports an increasing quantity of goods of a class which we do not supply. It is nihil ad rem to say, as the Edinburgh does, that in the thirty-one years preceding the grant of preference the proportion of British goods in the total of Canadian imports was greater than in the seven years succeeding that grant. These huge totals obscure the relevant facts. Let us look at the matter more closely, and the lesson will be very different. No doubt it is true that, alike before and after preference, the proportion of Canada's imports derived from the United Kingdom shows a progressive decline, compared with the proportion of her imports from all other countries, including the great and growing industrial and commercial country which is her immediate neighbour. The absolute amount of Canada's imports from the United Kingdom may or may not increase. As a matter of fact it did not increase at all, but declined, for about fifteen years preceding the grant of preference, whereas it has greatly

increased since. But the proportion of her imports from the United Kingdom to her imports from the rest of the world, though the rate of decline may be greater or less, must in any case decline with the expansion of Canadian trade in new directions and the growth of her needs, including those which the United Kingdom is unable and does not attempt to supply. Take the totals of her imports at any two stages of her progress, and the proportion of such imports drawn from the United Kingdom is sure to be smaller at the later than at the earlier stage. And so the comparison of that proportion in the years before preference and in the years after preference proves nothing at all. There are constant and inevitable influences at work to reduce, not the absolute amount, but the proportion of British imports. The effect of these influences preference does indeed mitigate, and greatly mitigate, but it cannot outweigh them. But because preference cannot do everything, does it follow that it does nothing at all, or so little as to be of small account? I maintain that, in respect of those branches of trade which it can reasonably be expected to affect that is to say, those branches in which, duties apart, the British importer stands a reasonable chance in the Canadian market, and against those competitors who do not possess overwhelming advantages of another kind-preference has been of momentous benefit to the United Kingdom.

If we look at the main classes of articles in which we are in active competition with foreign countries that benefit becomes unmistakably clear. To prove it I need only take the same groups of articles as the Edinburgh Reviewer, but I carry my examination further back and bring in the year 1890 as well as 1898 and 1906, to which he confines himself; and I also separate all other countries' (i.e. than the United Kingdom) into 'United States' and 'other countries.' VALUE, IN MILLIONS OF DOLLARS, OF CERTAIN DUTIABLE IMPORTS INTO CANADA FROM THE UNITED KINGDOM, UNITED STATES, AND ALL OTHER COUNTRIES.