a century later but long after. Ireland, though subordinate to the crown of England (and afterwards of Great Britain), was commercially separate till the union of 1800 and even later. One of the Irish grievances is, in fact, the commercial legislation first of England and then of Great Britain directed against Irish industries. In the same way commercial union with colonies was the last thing thought of until modern times, the exploitation of colonies by and for the mother country being the ideal. The distinction between the idea of political union and that of mutual commercial advantages has thus been complete in past times.

There are cases, moreover, in modern times at least, of commercial unions between politically separate entities, which were not intended to lead up in any way to political union. For many years, as is well known, a Reciprocity Treaty existed between the United States and Canada, in spite of their political separation. In the same way, in South Africa before the war, there was a Customs union between Cape Colony, Natal, and the Orange Free State, although the last-named was an independent republic. To the same order of arrangements belong, I think, the special regulations between Austria-Hungary and Roumania and other Danubian States for trans-frontier trade; and similar arrangements between France and China as respects the frontier trade between Tonquin and Southern China. There is no question of political union in the matter, but there are arrangements for frontier trade more or less resembling a Customs union.

In this way the precedents are complete for treating political association and commercial association as different things, and as not necessarily involving and implying each other. The assumption that political union follows commercial union is, theoretically at least, incorrect. It appears to be largely due, in reality, to the frequency with which undoubtedly commercial union has followed the political union of separate States, and to one important instance in which a Customs union (that of the German Zollverein) has contributed to the consolidation of an empire; but the cases of the former description are not to the point, while the single instance of the German Zollverein is not enough to prove that Customs unions always conduce to a closer union of a political kind. According to former experience, the commercial union of the British Empire-in time-will follow the political union; but how far mutual commercial arrangements will assist such an object will depend on special circumstances and the nature of the arrangements themselves, which are all matters for investigation.

Looking at the problem in this way, we cannot but recognise that the commercial union of the British Empire, meaning thereby a real Zollverein, or such a union for commercial purposes as exists between the different States of the United States, or the different provinces or the German Empire, in which the same commercial laws prevail, the

same money exists for all purposes, and, above all, there is a single Customs barrier against the rest of the world with all internal barriers abolished, must in the nature of things be somewhat difficult. The number of separate Legislatures necessitates so many separate commercial codes, which can only be fused into one by common agreement, or by the invention of devices like those of the American Constitution, by which certain subjects are reserved for a central congress. The same remark applies to money which is reserved for the central Government by the Constitutions of both the German Empire and the United States, but has not yet been reserved in the British Constitution, while there would be special difficulties in having a common money in the existence of places like Canada, which happens to lie within the radius of the United States banking system, or Gibraltar, which cannot avoid having Spanish money for common use, or India, which has the rupee for monetary unit and cannot get quit of that unit, or Egypt, which is technically a part of the Turkish Empire and not even a British State. The remark is even more applicable to the subject of a Customs union. This subject is not reserved for a central body by a political constitution as it is in Germany and the United States, while there are obvious practical difficulties which do not exist in those countries, and which would make the establishment of a Customs union impossible even if the central Government had power to deal with the matter. The difficulties are as follows:

(a) The physical separation of the different parts of the Empire. The sea, it is said, unites and does not separate, which is true in a sense, but is not true for the purposes of a Zollverein. That purpose is the abolition of Customs barriers where they are most irksome to trade—that is, between adjacent places. This irksomeness, as we have seen, is so great that it has led in some cases to such arrangements as those existing on the Austrian and Southern Chinese frontiers, or such an arrangement as the former Reciprocity Treaty between Canada and the United States. There is a real practical evil which a Customs union deals with in the most effective manner, and, although the sea unites the separate parts of the British Empire, it does not unite them in such a way that the inconvenience of Customs barriers is felt as it was in the trade between the different States of the American Union, or between the different provinces of Germany, or is felt now between any countries having a long land frontier between them. On the contrary, the longer the voyage the less important are the Customs barriers relatively as an obstruction to trade. The long voyage itself and the transhipment, which cannot be got rid of, are the real evils caused by distance in over-sea communication, and not the intervention of the Customs, serious as the latter intervention may be on a land frontier across which there is trade at many points. A Zollverein, therefore, comprising States or

provinces separated by great breadths of sea, could not give them the special advantages obtained by a Zollverein between contiguous places. Customs regulations, moreover, must still continue to exist at the ports, as they do even in coasting trade, so that, as far as they are an evil, inter-Imperial trade would still be affected by them.

(b) The variety of race and business which makes it expedient for different parts of the Empire to have each its own tariff, even against other parts, if it is to raise revenue by indirect taxes, which all must do. The Indian Empire is obviously so constituted that its inhabitants cannot be brought into line as consumers with the European populations of the British Empire. These populations provide indirect revenue mainly by the consumption of spirits, beer, tobacco, sugar, and tea; and sugar alone among these articles is extensively consumed in India. The people of India, again, are subject to a tax on salt not usually imposed on populations of English race. Still worse, although the Indian people consume sugar, the article with them is also an important article of widespread agricultural production, which would bring the tax-gatherer into close and unwelcome contact with masses of the people if a duty on sugar were imposed. On the other hand, India is a producer of the tea and coffee which are not worth taxing in India, but are a stand-by for Finance Ministers in other parts of the Empire.

The self-governing Colonies, again, in contrast with the United Kingdom, naturally desire to impose duties for purposes of revenue on the manufactures which they import mainly from Great Britain ; while in Great Britain, among the articles most suitable for taxation are to be found the tobacco, tea, coffee and sugar which are largely produced in the Colonies.

Unless each part of the Empire, therefore, is to arrange its own tariff, it will be extremely difficult for it, if not impossible, to raise suitable revenue by means of indirect taxes.

(c) This last difficulty is enhanced by the consideration of the 'pooling' arrangements among the different States which are the indispensable adjunct of a Customs union. The idea is that no province of the union is to have a Customs barrier against another part. Duties are to be levied in common. There must be a common purse, accordingly, not only for the Customs duties which are to be imposed on articles imported from the rest of the world, but on similar commodities produced at home. In other words, the Customs and Excise revenue of each part of the union is to be dependent on the vigilance of the revenue authorities in every other part. In such a union for the British Empire, our spirit revenue, for instance, would depend on the vigilance of authorities in Australia and South Africa. And then out of the common purse each State of the Empire would receive its share. In what way the shares are to be fixed, with heterogeneous populations like India concerned, will be no easy

matter, and it will be still more difficult to provide the automatic readjustments, according to the changes in population at each census, which existed in the German Zollverein.

(d) Difficulties arising from the uncertain political status of States or Provinces which form a portion of the Empire as far as the burden of defence is concerned, and which are popularly reckoned as within the Empire, but which are either not internationally recognised as part of the Empire at all or are subject to special arrangements by political treaties-as, for instance, our West African Protectorates. The doubtful position of Egypt has already been referred to in connection with the question of common money, but in the question of a Zollverein the status of that country would be still more embarrassing. Egypt is legally a part of the Turkish Empire, and it is bound by various international stipulations of that Empire as well as stipulations special to itself as regards shipping and navigation. To make it part of a British Zollverein would involve prolonged negotiations with European Powers that would almost certainly fail, or a rupture of treaties in time of peace involving a risk of war and the equal formidable mischief, perhaps, of throwing doubts on English good faith in carrying out treaties, however disagreeable sometimes their stipulations may be. The Soudan, which we hold in common with Egypt, could perhaps be included in a Zollverein more easily; but how odd a Zollverein of the Empire would look with large parts of it outside the union, and especially a part like Egypt, the strategical centre of the Empire itself.

Such difficulties existing, however, they should be carefully thought out by those who talk of a Zollverein or Customs union for the British Empire before we can even get to business in the discussion. I confess for one my inability to imagine how they are to be overcome. There appears to be no help to a solution in any proposals put forward, as far as I have yet observed.

Passing from this question of a Zollverein, we come to the proposal of 'preferential arrangements' in the matter of tariffs between the mother country and the other parts of the Empire. Such arrangements, it is supposed, will effect the same objects as a Zollverein-viz. a closer commercial union, which will also have the same political results as are expected from a Zollverein itself. Such is the abuse of language, that many people when they hear of an Imperial Zollverein are really thinking of a Customs barrier set up in the Empire against foreign countries, leaving the barriers inside the Empire intact, and are not really thinking of a proper Customs union at all.

All such proposals have a common character, so that it would be a waste of time to go into detail. To state their nature is surely to

show their ineptitude. What is proposed in effect is a commercial treaty between the Colonies and the mother country on a reciprocity basis, each Colony consenting to tax differentially certain articles it receives from foreign countries in competition with similar articles received from the mother country or the rest of the Empire, and the mother country in turn taxing differentially certain articles received from foreign countries in competition with articles imported from the Colonies. The business is to be arranged on the Do ut des principle, and the effect is to be the increased mutual dependence of the different parts of the Empire and their increased joint and several independence of foreign countries.

Such suggestions involve the certainty of injury to both the Colonies and the mother country if they are tried, and the uncertainty of any advantage whatsoever. Each part of the Empire is to divert a portion of its trade from the channels in which it naturally flows, a procedure necessarily involving loss, and it is to have the same trade afterwards inside the Empire, only at greater expense. Political advantage may conceivably ensue in the end from the different parts of the Empire sticking closer together even in this way, though it appears unlikely; but there is no commercial advantage at any time. But as to the political advantage, where there is no commercial advantage, may there not also be doubts? One or the other party must be exposed to extreme deception. If the Colonies get a better price in the mother country for their raw materials and articles of food than they would otherwise do, some people in the mother country will have to pay more, and it will have to be very clear indeed that they get a quid pro quo either in higher prices in the Colonies for what they sell or increased profits from large trade with them. At the time of the famous Hofmeyr suggestion that the Colonies and the mother country should impose a special tax of 2 per cent. ad valorem on all imports from foreign countries, duty calculated to yield about 7,000,000l., which could be appropriated to purposes of mutual defence, I recollect making a calculation, (1) that the portion of the 7,000,000l. paid by the United Kingdom would be nearly the whole, (2) that the price of the commodities imported into the United Kingdom from the Colonies as well as from foreign countries would be raised by a larger sum, and (3) that the Colonies contributing a small part of the amount would be more than compensated by the higher prices obtained for their produce in the United Kingdom, while the mother country in turn would obtain no such compensation from higher prices in the Colonies on its exports to them, owing to the small proportion of such exports with which foreign countries really competed. Disillusionment must thus follow any reciprocity arrangement of this sort. Instead of tending to political union, it will almost certainly have the reverse effect.