RELATIVE GROWTH OF EXPORTS OF MANUFACTURES TO FOREIGN COUNTRIES AND COLONIES.

The next table is extremely suggestive to the manufacturing country. It shows the total value of the exportations of the articles mentioned in the above tables in 1869 and 1900, the value sent to foreign countries and to the colonies, respectively, and the percentage of increase or decrease in each case. It will be seen that of apparel and slops, the exports to foreign countries increased 7 per cent, and that to colonies 168.4 per cent; of haberdashery and millinery, the exports to foreign countries decreased 85.9 per cent, and those to the colonies 52.9 per cent; that of the seven classes of articles for personal use mentioned in the first table, the exports to foreign countries decreased 47.2 per cent, while those to the colonies increased 35.5 per cent. Of the exports of hardware and cutlery, the exports to foreign countries show a decrease of 56.9 per cent, and to the colonies an increase of 2.4 per cent; while taking the entire nineteen classes of articles included in the second table, their total shows an increase of 16.5 per cent to foreign countries and 86.2 per cent increase to the colonies. Taking the total of the two tables, which include seven classes of articles for personal use and nineteen classes for domestic consumption, and aggregating over $100,000,000 in value in 1869 and nearly $140,000,000 in 1900, the exports to foreign countries show a DECREASE of 9.5 per cent from 1869 to 1900, while those to the colonies show an INCREASE of 59 per cent.

The next table shows the total exportation of cotton manufactures (exclusive of yarns) in 1869 and 1900, and the value to the colonies and to foreign countries, respectively, in each year. It will be seen that in piece goods the exportation to foreign countries shows a decrease of 27.1 per cent, while that to the colonies shows an increase of 38.2 per cent. In the statement of total exports of cotton goods, valued at over $300,000,000, in 1900, the exports to foreign countries show a DECREASE of 5 per cent, and to the British colonies an INCREASE of 69.1 per cent in the period from 1869 to 1900.

The next table shows the value of certain classes of partly manufactured and wholly manufactured articles exported from the United Kingdom in 1876 and 1900, respectively, and the share sent to the colonies in each year, the purpose being to determine the relative value of the colonial market for partly manufactured or wholly manufactured goods. It will be seen that while the colonies took 14 per cent of the partly manufactured articles exported in each of the years named, they increased their percentage of the wholly manufactured articles from 36.8 per cent in 1876 to 43.3 per cent in 1900.

THE COLONIES OFFER BY FAR THE BEST AND MOST PERMANENT FIELD FOR THE SALE OF MANUFACTURES.

A study of this series of tables seems to show beyond doubt that the colonial market has been in the experiences of Great Britain the more permanent one, especially for manufactures. The fact that in practically every class of manufactures the exports to the colonies show an increase, while in many of them the exports to foreign countries show an actual decrease, and that in the three great groups of manufactures-articles of personal use, articles of domestic consumption, and cotton manufactures, aggregating nearly $450,000,000 in value in 1900-the exports to foreign countries show in each case a decrease, and those to the colonies in each case a large increase, apparently justifies the conclusion that the colonial market is more permanent in its character, especially for manufactures, than that offered by foreign countries, where competition is greater both with local manufacturers and with other manufacturing countries.

66
"THE FLAG AND TRADE."

An elaborate and exceedingly valuable discussion of the question under the above title, by A. W. Flux, A. M., read before the British Statistical Society in June, 1899, is printed on another page, and is worthy a careful examination in a detailed study of this subject. Its extreme length renders it impracticable to present it as a part of this general discussion. The paper discusses the commerce of each of the colonizing countries of the world with their respective colonies, including United Kingdom, France, Netherlands, Germany, Spain, Portugal, and Denmark. (See p. 2785 et seq.)

(G.) DO THE MUTUAL ADVANTAGES OF INTERCHANGE OF THE PRODUCTS OF THE COLONY AND THE MOTHER COUNTRY LEAD TO THE REMOVAL IN PART OR IN FULL OF TARIFF OR OTHER TRADE RESTRICTIONS BETWEEN THE TWO SECTIONS?

It is a generally accepted historical fact that nations which have attempted to control and monopolize the trade of their colonies by restrictions, either through the carrying trade or by prohibiting or restricting their trade with other countries, have failed, and that such failure has resulted either in commercial depression in the colonies or in their absolute loss to the mother country. The quotations made from distinguished authors in the early part of this work all point to this fact, and cite not only the commercial restrictions of Spain as one of the causes of the loss of her colonies, but those of Great Britain toward her American colonies as the cause of her loss of those colonies which became the United States. English writers on colonial questions frankly point to this as one of the great errors in the series of English colonial experiments and from which that country has profited by an entire change of policy in this particular, the trade relations between the United Kingdom and her colonies being now absolutely unrestricted, at least as relates to any action by the mother country, while in one case, that of Canada, the colony has voluntarily given to the mother country certain trade advantages in the tariff recently adopted. Spanish writers on colonial subjects now frankly admit that this was one of the chief causes of Spain's colonial misfortunes and the final loss of her colonies, and French students of colonial matters also point out these historical facts, and urge that restriction of colonial trade by the mother country not only fails to obtain permanent advantages for the trade of the mother country but is likely to prove fatal in her relations with the colonies. Students of these subjects in other countries where colonial matters have attracted especial attention also point out these facts as an important lesson to be drawn from the earlier experiences of all colonizing nations.

TRADE RESTRICTIONS GRADUALLY ABANDONED.

The result of these national experiments and experiences in the attempts to control colonial trade for the benefit of the mother country has been the withdrawal of all trade restrictions, and in some cases the substitution of trade privileges for trade restrictions. Great Britain long ago repealed the law which required colonial trade to be carried in British vessels, and now places no restriction upon the imports, exports, manufactures, or productions of the colonies, or upon the sale of manufactures or productions by her colonies. Colonial products, like those of all other parts of the world, are admitted free of duty, with the exception of a few designated articles; while the rates on these few dutiable articles are nominally the same, whether the product is from the colony or elsewhere, though beet-sugar producers of other countries are now asserting that the recently adopted British tariff on sugar gives, indirectly, to the cane-sugar products of the British colonies slight advantages over the beet-sugar product of other countries; while it has been also asserted that the duties on rum are so adjusted as to give some slight advantages to colonial producers of that article. Generally speaking, however, it may be said that the low-tariff colonizing countries-England and Netherlands-make no restrictions upon the commerce of their colonies with other parts of the world, and place the products of the colonies upon the same footing with those of other countries in their entrance to the market of the mother country. The fact, however, that the countries mentioned admit nearly all foreign products to their markets free or at a very low rate of duty makes it apparent that tariff privileges in favor of the products of the colonies would in their case be impracticable, without a change in general tariff policy.

TENDENCY OF THE CANADIAN PREFERENTIAL TARIFF.

In the British colonies, where the tariff is fixed in practically all cases by the colony itself and not by the British Government, no trade advantages for the mother country had been given until Canada, in 1898, passed an act giving to the products of the mother country and certain of the British colonies a reduction of 25 per cent in the tariff rates; and this was followed by another act increasing the reduction to 33 per cent. A comparison of the figures of British exports to Canada since the adoption of that act with those of earlier years shows a marked increase during the years following its enactment. In 1897 the total exports of British and Irish produce from the United Kingdom to the Dominion of Canada amounted to £5,171,851; in 1898 to £5,838,000; and in 1899 to £6,969,535; an increase in the two years of over 33 per cent. A further study of the exports from the United Kingdom to Canada in the years preceding the enactment of this law shows a steady decline up to the very year of the enactment of that law. In the decade preceding the enactment of this law, 1887-1897, British exports of domestic produce and manufactures to Canada fell from £7,758,116 to £5,171,851, a reduction of 33 per cent. Thus it will be seen that in the decade prior to the enactment of the law giving special trade privileges to the products of the mother country in the Canadian markets the sales of the United Kingdom to Canada decreased 33 per cent, but in two years following the enactment of that law they increased 33 per cent. It may be further added that the exports from the United Kingdom to all the colonies from 1897 to 1899 increased but about 8 per cent as compared with an increase of over 33 per cent to the single colony giving this trade privilege, viz, Canada. In the principal Netherlands colonies the tariff rate of 6 per cent levied on certain articles applies equally on goods from all countries.

SUBSTITUTION OF TRADE PRIVILEGES FOR TRADE RESTRICTIONS.

In France a new departure of substituting trade privileges for trade restrictions with the colonies began in 1867 and has been extended to practically all of her colonies except those on the west African coast. In that year the French tariff was extended around Algeria, and freedom of interchange established between that colony and the mother country in all articles except sugar. French goods were to pass into Algeria without tariff restrictions, and Algerian products pass into France with the same freedom just as goods pass from one province of France to another. A little later the restrictions as to the vessels in which goods should be carried were also removed. This experiment proved so satisfactory in the case of Algeria that it has now been extended in nearly all articles to all the colonies except those on the west coast of Africa, where proximity to other colonies and vagueness of boundary lines render its adoption difficult at present.

REMOVAL OF DUTIES BETWEEN FRANCE AND ALGERIA INCREASED PRODUCTION IN THE COLONY AND MUTUAL EXCHANGE OF PRODUCTS.

The opening of the markets of France to the products of Algeria in 1867 was followed by a rapid increase in Algerian production and exports, and subsequently by a large increase in imports by Algeria from France. The total export of Algeria in 1866, the year preceding this action, were, according to the Statesman's Year-Book, £3,709,317, and by 1870 had grown to £4,978,250, an increase of 33 per cent in four years. By 1880 the total had increased to £7,406,780; in 1890 to £8,338,000, and in 1899 to £13,856,000. Thus the exports of Algeria since the opening of the markets of France through the removal of tariff restrictions between the colony and the mother country and the substitution of the privilege of free entry for her products into a market furnished by the 38,000,000 people of France have nearly quadrupled, and, according to the authority just quoted, 80 per cent of these exports went to France. On the import side the total imports of Algeria have increased from £7,166,597 in 1866 to £12,794,000 in 1899, and of this trade 81 per cent was from France.

INCREASE IN COMMERCE OF FRANCE WITH ALGERIA.

The following table shows the imports and exports of Algeria from 1841 to 1899, and indicates the growth of commerce which followed the removal of tariff restrictions between the colony and the mother country. The figures for the earlier years are M. Burdeau's "L'Algerie in 1891," those of later years from the Statesman's Year-Book:

It will be seen that the exports of Algeria, under the stimulus given to production by a free entrance into the markets of France, have quadrupled since the decade in the latter part of which the law permitting such free entry was enacted, while the exports of the British colonies during that time have only increased from £120,000,000 in 1870 to £268,924,000 in 1899, or little more than doubled during that period, despite the material additions to their area meantime.

Similar laws and regulations by which a large part of the commerce between the mother country and the colony passes free of tariff restrictions have as above indicated been adopted with reference to the French colonies of Martinique, Guadeloupe, St. Pierre, Miquelon, Reunion, French Indo-China, New Caledonia, Madagascar, Guiana, Gaboon, the Comoro Islands, and Mayotte, which include practically all of the French colonies, except those on the west coast of Africa, where conditions of trade, on account of their neighborhood with foreign colonies with less restrictive legislation, are unfavorable to the application of such a system.

The colonies with which this unrestricted trade relationship exists are, to use a recent expression of a distinguished officer of the French colonial service, considered as "extensions of the mother country." They include more than one-half in number, area, and population, of the French colonies.

An examination of the figures relative to the commerce of this group (including Algeria), in which the commerce with the mother country is unrestricted by tariff, shows that their total imports in 1899 were 567,000,000 francs, and of that sum 396,000,000 francs, or about 70 per cent, came from France. Their total exports in the same year amounted to 585,000,000 francs, of which 386,000,000 francs, or about 65 per cent, went to France. The other group of French colonies whose trade with the mother country is subject to the same tariff regulations as that of other countries, both in the colony and in the mother country, show total importations of 164,000,000 francs, of which 77,000,000 francs, or 47 per cent, came from France; and total exports of 121,000,000 francs, of which 56,000,000 francs, or about 46 per cent, went to France. Thus, taking the two great groups of French colonies, in the first of which commerce between the colony and the mother country is unrestricted by tariffs either in the colony or in the mother country, and in the second of which the general tariff applies alike to foreign countries and the mother country or colony, respectively, it appears that the group having no tariff restriction between the colony and the mother country draw about 70 per cent of their imports from the mother country, while the other group draw but 47 per cent from that source, and that the first-mentioned group send to the mother country 65 per cent of their products, while the second send but 46 per cent of their products to the mother country. Comparing these with the trade between the British colonies and the mother country it is found that the British colonies in 1900 drew but 43.4 per cent of their imports from the mother country and sent but 43 per cent of their exports to the mother country. (See table on p. 2765.)

No. 9-28

THE BEET-SUGAR INDUSTRY PROTECTED FROM COLONIAL COMPETITION.

In all cases, however, the removal of tariffs between the mother country and the colonies is so adjusted as not to disadvantageously affect domestic industries. The important beet-sugar industry of France is protected from the competition of tropical cane sugar by excepting sugar from the operation of the general law giving freedom of exchange between the colony and the mother country. Sugar from Algeria and other French colonies pays a duty on entering France, and there are exceptions in favor of certain other articles of domestic industry both in France and in the colonies.

INCREASE IN TRADE OF THE UNITED STATES WITH HAWAII UNDER SIMILAR CONDITIONS.

Another example of the stimulating effect of the freedom of interchange between a tropical producing country and a Temperate Zone consuming and manufacturing country is shown in the remarkable growth of the trade relations between the Hawaiian Islands and the United States under the reciprocity treaty of 1876, which removed practically all tariff restrictions between those islands and the United States. Attention has already been called to the enormous increase in the production and consumption of the Hawaiian Islands which followed; but the growth of commerce between the islands and the United States meantime has been equally marked. During the decade prior to 1876 the imports into the United States from Hawaii averaged about $1,250,000 per annum, and never reached $2,000,000. In 1877 they were in round terms $2,500,000; in 1880, $4,500,000; in 1885, about $9,000,000; in 1890, nearly $13,000,000, and in 1900, over $20,000,000. In exports from the United States to Hawaii, under this freedom of interchange, the growth was equally striking. In the decade preceding the reciprocity treaty the exports from the United States to Hawaii never reached as much as $1,000,000, averaging about $750,000. In 1877 they were $1,125,000; in 1880, $2,000,000; in 1890, $4,500,000; in 1900, $13,500,000, and according to the estimate of the collector of customs at Honolulu were in the fiscal year 1901 about $20,000,000. This growth in the exports from the United States to the Hawaiian Islands is especially striking in its evidence of the very rapid development and consequent consuming power of these islands, whose population is now but 154,000, and of that number but a comparatively small proportion of American or European birth or extraction. Practically all goods imported into these islands are for local consumption since they are not in any sense distributers as is the case with the British colonies of Singapore and Hongkong, elsewhere referred to, and the annual importation of merchandise valued at over $20,000,000 annually gives an average of $130 per capita, against $78 per capita in Australia, $62 per capita in the United Kingdom, $32 per capita in the British colonies other than Australia, Canada, and India; $21 per capita in France, and $11.14 per capita in the United States. Of the total commerce of the Hawaiian Islands, 79 per cent of the imports was from the United States and 99 per cent of the exports to the United States.

The following table shows the imports of the United States from and exports of the United States to the Hawaiian Islands at quinquennial periods from 1860 to 1900:

COMMERCE OF THE UNITED STATES WITH THE HAWAIIAN ISLANDS AT QUINQUENNIAL PERIODS FROM 1860 To 1900.

One other and later example of the removal of tariff restrictions between the mother country and the colony is found in the case of the United States and Porto Rico. The Porto Rican tariff act, which went into effect May 1, 1900, provided that the tariff of the United States should apply in Porto Rico against all foreign countries, but that in the exchange between Porto Rico and the United States only 15 per cent of that tariff should be collected either in the United States or Porto Rico. This was followed by an immediate increase in the trade between Porto Rico and the United States. The domestic exports from the United States to Porto Rico, which had averaged but about $2,000,000 per year prior to that act, were, in the fiscal year 1900, $4,260,892, and in the fiscal year 1901, $6,861,917, while the imports into the United States from Porto Rico increased from $3,179,827, in the fiscal year 1899, to $5,883,892, in the fiscal year 1901. In July, 1901, the remaining fragment of tariff between Porto Rico and the United States was removed on the motion of the former, and now there is absolute freedom of interchange. The table which follows shows the commerce between the United States and Porto Rico in each year from 1895 to 1901:

It appears from the above facts regarding the modern trade and tariff relations between the colony and the governing country that the disposition is now to substitute trade privileges for the trade restrictions of earlier years especially in cases where a tariff would reduce the facility for mutual interchange of those commodities for which the communities are interdependent. Formerly the trade of

the colony was forcibly obtained by the mother country through restrictions. The carrying trade was restricted to vessels of the mother country, the importation of goods to the colony from other than the mother country was either absolutely prohibited or held in check by tariffs higher than those of the mother country, and the exportation of goods from the colony to other countries was also controlled by similar arbitrary restrictions. Now all this is changed. No successful colonizing country makes restrictions to prevent its colonies selling their goods wherever they desire, and no country attempts to exclude foreign goods from the colony by giving it a higher tariff than it makes for its own people. Up to this point the change is merely in the form of the removal of restrictions. But to this there have been added in the cases above mentioned trade privileges in the form of the admission of the products of the colony free of any duty to the great markets of the mother country and giving to the people of the colony the products of the mother country free of any duty. This is true of France in her relations with most of her colonies as already explained, and it is also true of the United States in her relations with Alaska, Hawaii, and Porto Rico, and in all these cases it has been shown that the prosperity of the colony greatly increased, and that, following this increase of prosperity, the trade between the noncontiguous territory and the mother country rapidly increased. In Germany similar plans have been proposed but not adopted. The failure of this method in the case of Spain and her colonies seems to have been due in part to the excessive restrictions which she placed upon imports from other countries into the colonies, in other part to the local taxes levied in the mother country on colonial goods and the heavy taxes levied upon the colonies, and also in great part to the fact that the market of the home country to which the colonial goods were admitted was a comparatively small one, the entire annual importations of Spain being but about one-fifth those of France or the United States. In the United Kingdom and Netherlands the absence of any considerable tariff renders special advantages of this character to the colonies impracticable under present conditions, though it is well known that a strong sentiment in favor of a customs union for the United Kingdom and all her colonies exists both in the United Kingdom and her colonies. Two conventions urging such a union have been held attended largely by colonial representatives, and the proposition is still actively discussed both in the colonies and in England.

BENEFITS TO THE COLONY FROM TRADE PRIVILEGES.

These regulations of modern colonial management by which the tariff of the mother country is extended around the colony and general restrictions of trade between the two communities removed, and special privileges substituted for restrictions, open the great consuming markets of the mother country to the colony free of any tariff restrictions, and thus give it greater advantages in that market than are given to the products of any other country, while they place no restrictions on the sale of the colonial products to any other part of the world. By this process production in the colony is greatly stimulated. Regarding the imports of the colony, the method makes no requirement of the people of the colony in excess of that required of the people of the mother country, and in addition gives to the people of the colony all the commercial advantages they would have if residents of the home country (aside from the cost of transportation), since they are permitted to buy in the markets of the home country wherever competition may offer them the best prices, and transport such purchases into the colony free of any tariff restrictions. Thus the colony by this process receives privileges from the mother country which no other country offers it, viz, the absolutely free admission of all the products of the colony to its markets, and becomes in fact a part of the great commercial community of the mother country.

FREEDOM OF INTERCHANGE ESPECIALLY IMPORTANT BETWEEN TROPICAL AND TEMPERATE TERRITORY.

These advantages of interchange between the mother country and the colony are especially marked in cases where the colony can readily produce articles required in large quantities in the mother country, and the mother country produces an excess of the articles which the colony requires. This is likely to occur in the commerce of tropical colonies governed by temperate-zone countries. As shown elsewhere in this study, the demand of the temperate-zone countries upon the Tropics is steadily increasing, and is resulting in an increase of production in the Tropics. With that increase of production and sales by the tropical communities comes an increased demand by them for the manufactures and food stuffs of the temperate zone, and thus a rapid increase in the interchange. The United States, for instance, requires and imports a million dollars' worth of tropical products every business day of the year, and the chief imports of the tropical territory now under her control are manufactures and food stuffs, which form the principal share of her production and exportation. The advantage of a free interchange of these articles between the two sections of which the product of the one is the consumption of the other, and vice versa, is too obvious to require discussion. It is apparently due to this fact that there has occurred the very rapid growth in the production, exports, and general prosperity of the tropical colonies and territories having this freedom of interchange with the consuming and manufacturing countries of the temperate zone, and that the commerce of these colonies has been much more largely with the mother country than in the cases where no special privileges for interchange are given.

SHARE OF COMMERCE OF COLONIES WITH THE GOVERNING COUNTRY.

The following table shows the percentage of the imports and exports of the British, Dutch, and French colonies, and Porto Rico and Hawaii which are drawn from or sent to the governing country:

STATEMENT SHOWING THE SHARE WHICH THE MOTHER COUNTRY FURNISHES OF THE IMPORTS OR RECEIVES OF THE EXPORTS OF THE BRITISH, DUTCH, AND FRENCH COLONIES, AND PORTO RICO AND HAWAII, RESPECTIVELY.

1 Includes those colonies in which the tariff between the mother country and the colony still exists.

2 Includes those colonies in which no tariff exists between the colony and the mother country (except as to sugar entering France from the colonies), and the ariff of the mother country applies in the colony against all countries except France.