when the French annexed new countries in Africa or Asia, it would be found that they did relatively only a small proportion of the trade, because French manufacturers did not supply the particular articles which were required by an undeveloped country. Where the connection had been a long one, where the tastes of the population were the tastes of France, the figures were growing rapidly.

In conclusion, he expressed the conviction that, although many causes combined to produce successful trading relations between a mother country and its colonies, yet the most important single cause was the fact of political connection represented by the flag. That connection was of immense value in the early years, since it afforded guarantees so necessary to confidence in trade, and the longer it lasted the more important it became, owing to the thousand ties-financial, commercial, and social-which it fostered and maintained.

FURTHER DISCUSSION.

Mr. J. T. Taylor said that to answer the question, Did trade follow the flag? it would be necessary first to answer another question: Was the colony in favor of the flag or did it dislike it? He quite agreed with Professor Mayo-Smith that the mere fact that a colony was a colony would not in itself cause it to trade with the mother country under unfavorable conditions. But in the case of a colony and a mother country, where each felt that a real advantage was to be gained by their continuing to be associated, efforts would be made both by the mother country and by the colony to create such conditions as would be favorable to a common trade. Where you had such conditions-and they would always be created where proper relations existed between the mother country and her colonies-there trade would follow the flag, but in the absence of such conditions trade would to only a very small extent, if at all, follow the flag. He did not think, therefore, that it was a question which could be properly answered with a simple yes or no. Geographical and other physical conditions had, no doubt, bearing upon it, but their influence was slight compared with that exercised by the general relations subsisting between a mother country and a colony. The character of those relations, be they cordial or irksome, must be fully considered in each case before a trustworthy reply can be given to the question, Does trade follow the flag?

Mr. P. de Jersey Grut drew attention to a point in connection with the tabulation of statistics of exports and imports between the European countries. Transfers of gold were very properly eliminated in the case of the trade statistics of European countries, none of the European countries, with one exception, being producers of gold, and the transfer of gold between all these countries was almost entirely for the purpose of settling balances of exchange. But the case was wholly different when one of the countries involved in the transaction was a large producer and exporter of gold. That was the case with the Australasian colonies, South Africa, the United States, and one or two other countries. In these figures the gold exports from Australia to the United Kingdom were not included, and it seemed to him that they ought for such a purpose as the present to be included. Gold was as much a trade product in the case of Australia as iron was in the case of Great Britain and had as much claim to be included in the exports.

Mr. J. Barr Robertson called attention to the fact, in connection with France and her colonies, that the importations from the latter came in free of duty or at a much reduced duty, whereas the productions from other countries had to pay a high duty. This was completely protective in the case of French colonial products entering free of duty, and it was at least a differential duty in favor of colonial products entering France at a much reduced duty against foreign products. Similarly French products were favored as against foreign in entering the French colonies. That was a reason why there might be a large importation into France from its colonies and a large exportation from France to the colonies, since they were so much favored in regard to duties at the ports of entry.

Mr. Sydney Young suggested that the large trade done with French colonies was chiefly for the support of the official life in those colonies, and if that were taken off the trade would be very much less. It would throw great light on the trade of the colonies and on the point as to whether they were good for the mother country or otherwise, if some statistics could be afforded as to the comparative cost of French and German colonies and our own.

Mr. Frederick W. Lawrence pointed out that if the Straits Settlements were taken out from the other colonies, the percentage of imports by British colonies from the mother country had actually increased from one period to the other.

Mr. R. H. Hooker remarked that the author's last conclusion, viz, that "the efficiency of the policy of exclusive trade privileges to the metropolitan State, whether in promoting its own trade or the trade of its colonies, is not conspicuous in the records," afforded no evidence that the trade of the United Kingdom had lost ground at the expense of those other countries for which statistics were available over a sufficiently long period. To take France as an instance, the author showed that the proportion of the imports of her colonies from the mother country had certainly not increased, but rather declined during the past thirty years. It would seem to be a fair deduction from this, that whereas thirty years ago the excellence of certain foreign goods was such that the French colonies took them in preference to goods of home manufacture, these colonies were now, in spite of tariff and shipping facilities, still less satisfied with French goods. In satisfying the demands of her colonies, therefore, it would seem that other countries (among which the United Kingdom might not improbably be included) had made more rapid progress than France. It was unfortunate that, owing to their very recent acquisition of colonies, no smilar comparison could be made with the United States and Germany, now usually considered our most dangerous commercial rivals.

Mr. M. Macfie dwelt on the importance of a point which had been brought strongly before him in 1887, the year of the great international exhibition in Melbourne, and frequently since that time. That was the remarkable progress which had been made in the exports from Germany and even from the United States to all parts of Australasia. From recent inquires he found that the ratio of increase certainly did not fall off. If they were to form an adequate idea of the importance of British trade with the other parts of the empire, there was a collateral inquiry of the greatest importance to be made as to whether they were fully alive to the fact that while the ratio of our trade with the other parts of the empire might be maintained, the ratio of the trade with Germany and the United States, and all other countries with certain portions of the empire might be increasing even beyond the ratio of our own exports to the same destinations.

Another question of great importance to England and to the empire at large was the relation of our interimperial trade, with the attempt which was now being made extensively, and on very patriotic grounds, to effect the federation of the empire. The basis of those who advocated imperial federation was undoubtedly that of Zollverein, and consequently they attached greater moment to interimperial trade than to the trade between the United Kingdom and foreign countries. He believed the statistics up to date would not quite favor the conclusion toward which they seemed to tend. It would appear that the proportion of trade which we did with other parts of the empire was considerably below what we did with foreign countries. It should be considered, therefore, whether in their anxiety to promote interimperial trade-which formed a comparatively small fraction of the general trade of this country-they might not be ignoring conditions vital to the trade we did with foreign countries. Without desiring to neglect interimperial trade, it would be unfortunate if they were to take any step which might prejudice foreign countries against their own and excite the notion that they were aiming at interimperialism rather than maintaining the old Cobden idea of free trade with the world and "open doors" wherever they could get them.

Mr. J. Johnston, referring to the point introduced by the last speaker, said, if they were to introduce imperial federation he presumed they would try and carry out the broad principles which that speaker had been telling them should be carried out. It was quite possible that if Australia federated, the free-trade colony of New South Wales would be able to get a great many of her principles carried out in the other colonies as well, possibly the whole of them; and if they could federate the whole empire on a free-trade basis and shut up a great many custom-houses, it would be a great advantage to the trade of the whole empire and of the world at large. Proximity was of great importance, as Professor Mayo-Smith had shown, but he thought facilities of intercourse were of almost greater importance, and they had a specimen of a great commercial market arising within the last twenty years through facilities of intercourse. He was one who' fully believed that Germany would not have taken the position in the markets of the world she was taking now had it not been for the action of the German Government in subsidizing lines of steamers to all parts of the world and sending her men forward as commercial travelers to push German trade in all directions. If England would school her young men in the languages of the countries to which they were about to be accredited, it would be of far more importance in increasing trade than annexing erritory in West Africa or elsewhere.

DR. J. FORBES WATSON ON THE FLAG AND TRADE.

[Paper read before the Royal Colonial Institute, London, February 26, 1878, by Dr. J. Forbes Watson, director of the India Museum.]

THE CHARACTER OF THE COLONIAL AND INDIAN TRADE OF ENGLAND CONTRASTED WITH HER FOREIGN TRADE.

Two years ago I had occasion to compare the trade carried on between the United Kingdom and the British possessions with that between the United Kingdom and foreign countries. The results of that comparison were published at the time, the figures then given being those for 1874. Desirous of ascertaining to what extent the conclusions then formed would be borne out by later statistics, I recently examined the trade returns for 1876, the last ones published, and was struck not only by the large relative increase of that portion of our trade which is carried on with our own possessions, but also by the evidences afforded of the peculiarly advantageous nature of that trade. Our colonial trade, in fact, is distinguished from our foreign trade by certain characteristics which considerably enhance the degree of importance it already possesses on account of its magnitude. It is the purpose of the present paper to endeavor to throw some light on these special characteristics.

THREE KINDS OF COLONIES.

In the following table will be found the principal data referring to the trade and population of the different colonies, which have been grouped as follows: (a) Trading and military stations, such as Hongkong, Singapore, and Malta. (b) Plantation colonies, such as the West Indies, Ceylon, and Mauritius.

Agricultural, pastoral, and mining colonies, such as Australia, Canada, and the Cape.
POPULATION AND TRADE OF THE COLONIES.

This table was worked out two years ago on the basis of the returns for 1874. As it is quoted here solely with the view of illustrating the striking differences in the functions, so to speak, of each of these three groups of colonies, the figures of that year will answer the purpose; nor would the results have been materially affected by the substitution of later figures. These results may be thus briefly summarized:

Taking first the last named but most important group of colonies, viz, the agricultural, pastoral, and mining colonies, we find that they contain a European population of above 6,000,000, and that their trade with England amounts per head of the European population to £38 in the case of the Cape, £18 in the case of Australia, and £6 in the case of the North American colonies.

The extent of the commercial relations with England which these figures imply may be best gathered from the fact that the corresponding figure for the English trade with the United States-the oreign country which has the most extensive commercial relations with England-would be £2 5s. per head, or not much more than one-third of that for Canada, about one-seventh of that for Australia, and about one-fifteenth of that which shows the trade with England of a colonist at the Cape.

In the case of the Cape, however, the estimated amcunt of trade for each white inhabitant is naturally greater than that for Australia and Canada, from the fact that the Cape contains a considerable native population, which helps to increase its producing and consuming power.

In the case of the plantation colonies, in which the number of European settlers is altogether insignificant as compared with the native population, the trade per white inhabitant ranges still higher, amounting to £310 of total trade, and to £165 of English trade. Although in the case of these colonies the bulk of the imports is consumed by the native population, and the bulk of the exports produced by native labor, the practice of estimating the trade per head of the white inhabitants only is justified by the consideration that but for the capital and enterprise of the European planters, the bulk of the trade would probably not have existed.

In the case of the trading stations, the few European residents are only the intermediaries of a trade carried on, in reality, not with the population of the colony, but with the adjacent foreign countries, and in this case the numbers for each white inhabitant rise to £10,000 of total trade, and to £2,000 of English trade.

The principal data for each class of colonies are recapitulated in the following tabular form:

In a view of the trade of the whole of the British possessions, the Indian trade must be included with that of the colonies proper.

***

COMPARISON OF TRADE AT TWO PERIODS.

The period of eight years, which has been selected for comparison, just marks the beginning and the end of that period of extraordinary inflation of trade which followed the Franco-German war. The year 1869 presents in every way many analogies with that of 1876. Both were years of depression, subsequent upon years of great excitement. The year which followed 1869 witnessed the beginning of a wonderful development of trade; and probably that which followed 1876 would, but for the political complications in the east, have been likewise marked by a recovering trade. The years 1869 and 1876 were also both preeminently normal years, in which trade depended more upon the permanent economical conditions of the world than upon any accidental circumstances. There is also this advantage, that, with the exception of the heavy fall in the value of cotton, the general level of prices is very similar in the two years, so that a comparison of the values alone may also be taken as representing approximately the relative bulk of trade done in the two years.

In the trade returns for the year 1876, the first circumstance which attracts attention is that India stands ahead of every other country as the one which absorbed the largest quantity of British produce and merchandise, whereas in 1869 it only occupied the third rank, both the United States and Germany coming before it. Another interesting fact is, that in 1876 for the first time, the British exports to Australia exceeded those to the United States, although the population of the latter exceeds that of Australia almost twentyfold. In that year the exports to Australia amounted to £17,700,000 in value, while to the States they only amounted to £16,100,000. These two facts at once point to the change which has taken place between the years 1869 and 1876, viz., to the growth of the trade with British possessions, and to the diminution of that carried on with foreign countries. Between these two dates the exports of British home produce to the British possessions increased by £17,000,000, while the exports to foreign countries diminished by £6,000,000. Thus but for the great expansion of the colonial and Indian markets, the export trade of 1876 would have shown a diminution as compared with that of 1869, instead of which there is an increase in the sum total of exports from £189,000,000, to about £200,000,000. This result will appear even more striking when we compare the figures for the two final years with those for all the intervening years, as shown in the subjoined table:

It will be noticed that the export trade to foreign countries was subject to great fluctuations, increasing from £141,900,000 in 1869 to £195,700,000 in 1872, but subsequently falling to much below its initial amount, while the proportion of colonial and Indian trade has steadily risen from 25.3 per cent to 32.3 per cent-that is, from about a fourth to a third of the entire exports. Although there is an absolute falling off from 1875 to 1876, even that is due more to lower prices than to any great diminution in the quantity of the merchandise exported.

In order to account for the greater steadiness of the colonial trade, it is necessary to review in detail the trade in the different articles of export.

GROWTH IN EXPORTS OF MANUFACTURES TO THE COLONIES.

One important fact is apparent from even a cursory examination of the trade list. It is, that although the average share of the colonies and India in the English export trade does not exceed one-third of its total value, there are a great many articles which are exported chiefly to the colonies, and in which the colonial and Indian share amounts to from one-half to three-fourths of the whole quantity exported. On examination it is found that the articles which show this predominance of colonial demand are all related in character to each other, and that they may be arranged in a few well-defined groups.

There is first a group including articles of personal use and attire, such as apparel, haberdashery and millinery, hats, boots, umbrellas, etc. The proportion of the total quantity of these articles exported to India and the colonies is shown below for the two years 1869 and 1876:

There is another group of exports allied to the previous one and comprising a variety of articles of domestic consumption, such as provisions, pickles, beer and ale, soap, medicines, and perfumery, as well as books, musical instruments, saddlery and harness, hardware and cutlery. The preponderance of colonial demand for all the articles in this group, if not quite so striking as it is in the previous one, is yet very considerable. The actual proportion taken in the two years 1869 and 1876 by the British possessions is shown below:

The articles just enumerated have this feature in common, that they are all exported in the final stage of preparation and ready for immediate consumption; as such, therefore, they represent for the same weight and value a larger proportion of British labor than those articles which have yet to undergo some process of manufacture in order to fit them for immediate use. Not only do the British possessions take by far the larger proportion of such articles, but on comparing the two years 1869 and 1876, we find that, large as the colonial share was in 1869, it is larger still in 1876, the percentages of the colonial demand for the latter year being almost uniformly higher than they are for the former. It is especially interesting to examine in detail the change which has taken place within this short

period of eight years. The results are so uniform that it is sufficient to mention only a few of the principal articles above referred to, together with the totals for each class. The values and percentages exported to British possessions and to foreign countries are shown below:

It will be noticed throughout that the exports to foreign countries are marked by a striking decrease while the exports to the colonies exhibit an even more striking increase, amounting on the average to about 40 per cent an increase which far more than outweighs the decrease in the foreign demand. The proportion of these articles exported to the British possessions is now so great that in 1876, out of a total export of £23,600,000, they took as much as £16,800,000, or about 70 per cent of the whole exports of this class, whereas their share in 1869 amounted to only 58 per cent, thus showing the growing dependence of that portion of British trade upon colonial demand.

THE COTTON GOODS TRADE FLOURISHES IN THE COLONIES, BUT LANGUISHES ELSEWHERE.

There are likewise several other trades, some of them the leading export trades of England, which in the same way become every year more dependent upon the demand from the British Empire itself. Foremost amongst them is the cotton trade, which alone constitutes about one-third of the whole of the English exports. The comparative growth of the Indian and colonial demand for cotton manufactures since 1869 is shown below.

The general result is the same as in the class of articles already examined-that is, a decrease of foreign demand, and an even more rapid growth of the demand from the British possessions, which in the year 1876 absorbed 40 per cent more cotton manufactures than in 1869. As regards the trade in plain cotton piece goods, the quantity exported to the British possessions in 1876 amounted to very nearly one-half of the entire exports, or to £15,400,000 out of a total of £31,500,000, a result which must be attributed to the great expansion of the Indian trade. As regards the whole of the cotton manufactures, the quantity exported to the British possessions in 1876 amounted to about two-fifths of the entire export, or £22,000,000 out of a total of £54,900,000, being about £6,300,000 more than in the year 1869; whereas the export of cotton manufactures to foreign countries diminished during the same period by about £4,500,000. Thus the growth of the Indian and colonial demand for cotton manufactures and the corresponding decline of the foreign demand show about the same ratio as that already observed in the case of articles of personal use and of domestic consumption.

These results are well calculated to excite apprehension regarding the future of our trade with foreign countries. It must be remembered that the year 1869 was specially selected as being a comparatively normal year, and one in which the foreign demand was very much smaller than in the years subsequent to the Franco-German war, and yet the year 1876 shows a further reduction even upon such a comparatively unfavorable year as 1869. Had the figures for 1876 been compared with those of any of the immediately preceding years the diminution of the foreign demand would have appeared still more alarming.

Similar observations apply to most of the other trades, the present foreign demand as compared with that of 1869 being either stationary or declining, while the exports to the British possessions are rapidly rising. Thus as regards the silk manufactures, while the quantity exported to foreign countries has only slightly increased, the export to British possessions has increased more than fourfold, having risen from £180,000 to £818,000. In general it is safe to assume that of those articles exported in an advanced stage of preparation a considerable and rapidly increasing proportion go to the British possessions, while those articles which have still to undergo some manufacturing process to fit them for immediate use are mainly exported to foreign countries.