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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.
(c) Agricultural, pastoral, and mining colonies, such as Australia, Canada, and the Cape.

POPULATION AND TRADE OF THE COLONIES.

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£ 4,657,000 3,500,000 tons entered the port in 1874. 5,413, 000 1,853.000 tons entered the port of Sin

gapore in 1874. Tire English trade not separately re

corded. 1,531,000

538,000 1,283,000 1,316,000 14,738,000

1.-TRADING STATIONS.
Hongkong..
Straits Settlements
Labuan......
Gold Coast.
Lagos..
Sierra Leone and Gambia
Aden
Malta.
Gibraltar
Total

II.-PLANTATION COLONIES.
The Bahamas
Leeward Islands:

Antigua ..
Montserrat
St. Christopher
Nevis.
Anguilla
Virgin Islands.

Dominica.
Windward Islands:

Barbados
St. Vincent..
Grenada..
Tobago

St. Lucia
Turks and Caicos Islands.
Trinidad
Jamaica
British Guiana
British Honduras.
Mauritius...
Ceylon

Total

III.-AGRICULTURAL, PASTORAL, AND MINING COLONIES.
Africa:

Cape and Kaffvaria
Griqualand West..
Natal

Total...
Australasia:

Victoria
New South Wales
Queensland
South Australia
West Australia
Tasmania
New Zealand.

Total ...
North American Colonies:

Dominion of Canada and Newfoundland

Total colonies ...

i The second column contains only the number of the English population.

2 Probably not less than £75,0 10,000.

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 coinmercial 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 foreign country which has the most extensive commercial relations with England—would be £2 58. 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 amount 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:

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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.

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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 perinanent 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:

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1869. 1870. 1871. 1872. 1873. 1874. 1875. 1876.

141, 900,000
147, 800,000
171, 800,000
195, 700,000
188, 80,000
167, 300,000
152, 400,000
135, 800,000

£
48, 100,000
51,800,000
51,300,000
60, 600,000
66, 300,000
72,300,000
71,100,000
64,900,000

190,000,000 199,000,000 223, 100,000 256, 300,000 255, 200,000 239, 600,000 224,500,000 200, 700,000

23 23.6 26 30.2 31.8 32.3

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:

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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 periumery, 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:

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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, fogether with the totals for each class. The values and percentages exported to British possessions and to foreign countries are shown below:

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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.

TIIE COTTON GOODS TRADE FLOCRISIES 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 itselt. 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.

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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 £51,900,000, 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.

No. 4 -33

It is interesting to notice how uniformly this remark applies to every class of British exports, as will appear from the following numbers:

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Thus the colonies take 40 per cent of the finished cotton manufactures and only 21.9 per cent of the cotton yarn exported; they take 23.4 per cent of all the woolen and worsted manufactures and only 0.3 per cent of the yarn; they take 10.4 per cent of manufactured iron and only 3.6 per cent of pig, puddled, and old iron; and, finally, while of steel-wrought and unwrought-they take only 17.7 per cent, their share of hardware and cutlery amounts to 40.6 per cent and of implements and tools to 53.2 per cent. For the whole of the above industries, which together form the mainstay of our export trade, the proportion of unfinished manufactures exported to the British possessions amounted to only 14.7 per cent, while of finished manufactures the proportion rose to 36.8 per cent of the value exported to all countries.

BRITISH EXPORTS TO COLONIES INCREASE WHILE THOSE TO FOREIGN COUNTRIES DECREASE, The export trade to the British possessions is thus distinguished from that to foreign countries by two marked characteristics. The first is the steadiness and rapidity of its growth as compared with the violent fluctuations to which the foreign demand is liable; the second is the preponderance in the exports of finished manufactures over those in various stages of preparation, or what may be termed half manufactures. Both these characteristics tend very much to our advantage. On the one hand, the comparative steadiness of the colonial and Indian markets render trade with them less subject to sudden losses, while the permanent expansion of these markets has mitigated, and to a considerable extent neutralized, the disastrous effects produced by the rapid withdrawal during the last four years of a considerable portion of the foreign demand. On the other hand, the preponderance of finished goods among the exports to the colonies and India means that they represent a larger amount of British labor than is represented by an equal value of exports to foreign countries. It may be reasonably inferred, therefore, that the British possessions, which consume British goods to the extent of almost one-third of our total exports, give employment to considerably more than one-third of the working population employed by our export tracie.

WHY TIE COLONIAL TRADE IS MORE REGULAR AND PERMANENT THAN FOREIGN TRADE.

These two characteristics of our colonial trade are in reality due to one and the same primary cause. It is that in the case of our own possessions the consumers of our manufactures constitute the bulk of the populations; hence the demand is subject only to those fluctuations produced by the comparatively slow and more or less regular changes in their numbers and wealth.

But in the case of inany foreign countries our manufactures are merely subsidiary to a large local supply. To a considerable extent, also, our exports to foreign countries do not go directly to the consumer, but are imported by the foreign manufacturers themselves as a kind of raw material, entering into theirown manufactures

. The foreign demand for English manufactures has thereiore in the case of many countries, no necessary relation with either the numbers of the population or their total consuming power for a given article, and is liable to be disproportionately affected by even slight fluctuations in the aggregate consumption. Hence such variations as those which have taken place in the exports to the United States, which from £40,700,000 in 1872 fell to £16,800,000 in 1876, or as those presented by the exports to Germany, which between the same years declined from £31,600,000 to £20,100,000.

CONCLUSION,

On the whole it might be held that, in consequence of its dependence upon the regularly increasing consuming powers of the vast bulk of the population, the export trade to our possessions partakes largely of the character of our own internal trade, and the additional markets obtained for our manufactures may in every way be considered as being simply extensions of our home market. This is especially the case as regards those colonies which are really peopled by English settlers, such as Canada, the Cape, and Australia.

THE MALAYAN PENINSULA.

TIIE METHODS OF GOVERNMENT AND DEVELOPMENT DESCRIBED BY AN OFFICER OF TIIAT GOVERNMENT.

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[Paper read by Hon. F. A. Swettenham, British resident in the Federated Malay States, before the Royal Colonial Institute, London, March 31, 1896.)

I had meant to call my paper “The British Government of Native Races,” but I felt that the subject was too wide and too open to controversy to be dealt with in the time allotted to a lecture of this kind. I therefore ask you to bear with me while I give to your consideration an account of “British Rule in Malaya,” as illustrating a particular and somewhat peculiar instance of the British government of native races, a subject which is certainly not without interest however I may fail to do justice to its attractions.

I say the case is special, because the Malay is imbued with peculiar characteristics which make him unusually ditlicult to deal with, and as I am now speaking of the beginning of our close intimacy with Malay affairs, and that took place in the year 1874, I had better use the past tense, though I do not mean by that to infer that everything that was then is altered now. It is almost inconceivable that up to January, 1874, so little was known of the Malay or his home, but it is no exaggeration to say that at that time there were not in the Straits Settlements half a dozen Europeans who could have correctly stated the names of the Malay States or the titles by which their rulers were known. The Straits Settlements, as you know, is an exceedingly ill-named Crown colony, embracing the small island of Singapore at the Southern extremity of the Malay Peninsula; the smaller island of Penang, 360 miles farther north, with two strips of

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