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H 1968 B^ Do not, deface books '\>y mark^ or writing Cornell University Library DA 18.B82 1913 Problems of empire: 3 1924 027 931 728 PROBLEMS OF EMPIRE Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924027931728 PROBLEMS OF EMPIRE THE FAITH OF A FEDERALIST BY VISCOUNT HYTHE, D.C.L. ■^^ lipNORARY FELLOW OF BALLIOL NEW EDITION WITH A FOREWORD BY THE RIGHT HON. EARL GREY G.C.B., G.C.M.G., G.C.V.O., P.C. LONGMANS, GREEN, AND CO. 39 PATERNOSTER ROW, LONDON NEW YORK, BOMBAY, AND CALCUTTA I913 EV. IVi First Edition 1904 Reprinted 1906 FOREWORD Most willingly do I respond to Lord Hythe's appeal to write a short foreword to this volume. I am glad to do so because it affords me pleasure to bear testimony to my admiration for the manner in which Lord Hythe, for nearly a quarter of a century, in the teeth of much indifference and discouragement, has sought to enlighten, with great ability and per- severance, an apathetic British Public on the subject of Federalism. He has pointed out the way in which the application of the federal principle to the United Kingdom would conduce to the peace and good government of Great Britain and Ireland ; also the way in which its application to the self-governing units of the Empire would lead to their closer union and increased strength. I am also glad to respond to Lord Hythe's appeal because the republication, in a cheap form, of the Addresses and Papers contained in his volume on ' Problems of Empire,' published twelve years ago, comes at an opportune moment vi FOREWORD when the public mind is occupied with the questions therein discussed. In commending this volume to the serious attention of all who take an interest in public affairs, I wish to safeguard myself against the supposition that I associate myself with all Lord Hythe's arguments and opinions. But while differing from him on some points I have no hesitation in identifying myself with his main conclusions : 1. That oiu- system of parliamentary' govern- ment has broken down, and that it is desirable in the highest interests of the State that a National Convention, representative of all parties, should be convened for the purpose of considering how the efficiency of that system can be restored. 2. That the application of the federal principle to the British Isles, by the establishment of provincial legislatures in various parts of the United Kingdom, created for the purpose of managing such domestic business as may be delegated to them by the Central Parliament, would tend to relieve the congestion of the House of Commons, to restore to us the lost freedom of our Parliamentary Institutions, and to make the United Kingdom a union in fact as well as in name, thus increasing its prosperity, dignity, and strength. 3. That the interests of England, Scotland, and Wales, not less than those of Ireland, call for such an application of the federal principle FOREWORD vii to the domestic affairs of the United Kingdom as will enable the English, Scotch, and Welsh, as well as the Irish, to be masters in their own house ; and that no system of Home Rule for Ireland will work beneficially which cannot be applied to the other parts of the United Kingdom. 4. That a federal system for the United Kingdom is no essential part of, although it may prove to be a convenient stepping-stone to, the federation of the Empire. 5. That just as the application of the federal principle to the United Kingdom will enable its component parts to manage their domestic affairs without interference from outside, so the further application of the federal principle to the self-governing units of the Empire will enable every Canadian, Newfoundlander, Australian, New Zealander, and South African to enjoy the full development of his Imperial citizenship, and to share with the peoples of the United Kingdom the privileges, obligations, and responsibilities of Empire. Further, I would point out that the Essays of this volume are invested with an additional interest because they are from the pen of an independent and disinterested worker who has spent several years during the last twenty-five in visiting the outlying Dominions of the Empire in order to obtain a knowledge of Imperial problems at first hand, and who deliberately sacrificed the favourable opportunities open to him of embarking viii FOREWORD upon a promising political career, in the belief that by remaining outside the House of Commons he would be better able to advocate the federal prin- ciples in which he believed, and to serve the Empire to which he had pledged all the energies of his life. Lord Hythe is, moreover, deserving of the honour which belongs to those who are entitled to be included in the honourable ranks of the pioneers. He has helped to blaze the trail of Imperial evolution. Twenty-one years ago he recognised in his speech at Epsom, with a prescience that does him special credit, that the future constitution of the Empire would probably consist of an Imperial council which, being fairly representative of the self-governing units of the Empire, should be responsible for the adminis- tration of Imperial Defence, of Foreign Affairs and of India and the Crown Colonies and Pro- tectorates ; and that the contributions required for this Imperial administration from the various Parliaments of the United Kingdom and of the self-governing Dominions, should be collected by the separate units in such way as might appear to them to be best, without any interference from outside. It is seldom that the forecasts of any political thinker have been so accurate in anticipating the requirements of the future as those of Lord Hythe in the speeches and addresses republished in this volume. Grey. INTRODUCTION The favourable reception accorded twelve years ago by the press of all shades of political opinion to the earlier papers and addresses included in the present volume has induced me to republish them, together with some more recent addresses, in the hope that their wider perusal may lead to a better appreciation of the dangers which beset the Empire under our present system of government, and to a serious consideration of the principles on which reform must proceed if the diversified congress of States which make up the British Empire is to remain a united whole. The main purpose of the papers and addresses is to induce my fellow-countrymen to recognise the impossibility of dealing effectively with the separate interests of England and Scotland, as well as of Ireland, the affairs of the United King- dom, and the business of a widely extended Empire, by the same legislative machinery. What has happened during the past twelve years immensely strengthens the case for the establish- ment of subordinate legislatures in the several X INTRODUCTION countries of the United Kingdom as the only means by which the congestion of business in the House of Commons can be reheved, and the dangers to which the Empire under our present system is exposed can be avoided for the future ; while not the least of the arguments in favour of this proposal is, that it affords a solution of the Irish question not open to some of the most serious objections urged against the measures of 1886 and 1893. The outstanding factor of the present situation is that Parliamentary Govern- ment has broken down. From the British point of view the restoration of efficiency to our Parliamentary machinery has become of greater importance than the settlement of the Irish question. In the later addresses it is urged that no satis- factory settlement of our constitutional difficulties is possible except by conference and consent ; and as these pages are going to press, this plea receives the powerful support of Lord Loreburn. His letter to the Times has aroused public atten- tion, but it is quite evident from the way in which it has been received that there is no common ground on which the party leaders can enter a conference if the purview of that conference is confined to Ireland. The policy of the Government is to pass the Irish Home Rule BiU into law under the Parliament Act. The Unionist Party contend that the Bill must be submitted to the judgment of the people INTRODUCTION xi before becoming law. Sir Edward Carson has succeeded in organising an armed resistance to the appHcation of the Bill to North-East Ulster. The Nationalist Party insist that the Bill must apply to the whole of Ireland, and as the Govern- ment are dependent for their existence on Nationalist support, it is difficult for them to make any concession on this point. A general election offers no solution of the crisis with which the country is face to face. If the Govern- ment win, they will be confronted with rebellion in North-East Ulster ; if the Opposition are successful, they will certainly be unable to govern Nationalist Ireland. Under these circumstances, the only hope of escape from the present impasse is a conference or convention on the South African model, in which all parties and all nationalities of the United Kingdom must be represented, to con- sider a modification of the constitution from the broader point of view discussed in these pages. By no one has the present condition of the House of Commons been described more strongly than by the leader of the Unionist Party : ' It has ceased to be a legislative assembly in any sense of the term.' Both parties are bound to find a remedy, and the only effective remedy that has hitherto been suggested is the devolu- tion to subordinate legislatures in England and Scotland, as well as in Ireland, of much of the business with which the House of Commons iix INTRODUCTION attempts under existing conditions so ineffectually to deal. But no great constitutional change of this kind can be carried through Parliament by the mere instrumentality of party. It must be the result of conference and agreement. For over twenty years I have urged (as these addresses will show), and on the evidence now before us it is certain, that no satisfactory settle- ment of the Home Rule question is possible so long as the question is considered exclusively from the point of view of Ireland. In any settlement the interests of the inhabitants of Great Britain must also be considered. If Irishmen are given the right to manage their own affairs, no Irishman, be he Nationalist or Unionist, has the right to continue to interfere in English or Scotch business. Hopeful features of the present situation are that there are many Irish Unionists who are as de- termined as Sir Edward Carson is to resist the present Home Rule Bill to the utmost, who would yet accept Home Rule as part of a general scheme of devolution, and as necessary for the better government of the United Kingdom, that there are many Irish Nationalists who are animated by the tolerant and patriotic spirit of Mr. William O'Brien and the All-for-Ireland League, and that Sir Edward Carson himself, as appears from his speech at Durham, is prepared to accept the federal solution. What precise lines devolution is to take, and what, in view of the existing state of feeling' INTRODUCTION xiii separate provision must be made for North-East Ulster, are questions to be determined by con- ference. It is my firm conviction that the federal principles discussed in these addresses — of which Earl Grey has become such a powerful advocate — provide the basis for a solution which will be accepted by reasonable men of all parties, and will conduce to the better govern- ment of the United Kingdom, and to the main- tenance of the British Empire. CONTENTS PAGE Imperial Government 1 Speech at Epsom, 1892. The Principles of Imperial Defence . . 21 From the Nineteenth Century, July 1893. Australia and Imperial Defence ... 42 Extracts from an Address deUvered before the Imperial Federa- tion League of Victoria at Melbourne, October 1896. Federal Government for the United Kingdom and the Empire 56 From the Nineteenth Century, August 1901. Steps to Imperial Federation .... 79 A paper read before the Royal Colonial Institute, November 11, 1902. The Finance of Federal Government for the United Kingdom 105 A paper read before the Royal Statistical Society, January 1903. Preferential Tariffs 136 Letter to the Times, June 5, 1903, Canada and Imperial Preference . . . 147 Speech to the Canadian Manufacturers' Association, Toronto, September 16, 1903. Empire Problems 154 Address delivered at the Union Club, Johannesburg, February 1, 1910. xvi CONTENTS PAGE The Crisis and the Way Out .... 176 April 1910. The Breakdown of Parliamentary Govern- ment, AND THE Remedy 181 Address delivered at Hythe, January 21, 1913, The Dominions and Imperial Defence . . 199 Reprinted from 'Naval Annual,' 1913. PROBLEMS OF EMPIRE IMPERIAL GOVERNMENT (Speech at Epsom, 1892) It must be clear to every sensible man that the task imposed on our present Imperial Parliament is absolutely beyond the capacity of a single assembly. The House of Commons attempts to deal with the internal affairs of Ireland, Wales, Scotland, and England. Judging by the time that Irish affairs now occupy in Parliament, when there are so many other important things to be considered, the regulation of the internal affairs of Ireland alone is a sufficient task for any repre- sentative body, and I am sure that most people in this room will agree with me when I say that the domestic government of some thirty millions of Englishmen, a business which is now very much left on one side, would give ample scope to the energies and talents of any body of legislators, however energetic and however capable. The House of Commons, again, attempts to supervise 2 PROBLEMS OF EMPIRE the government of some 250 millions of the human race in India. If that supervision is to be effective — and, mind you, it ought to be effective, for we have undertaken in India enormous responsi- bilities — far more time must be given to Indian questions by people who are far more intimately acquainted with them than the average member of the British House of Commons. I need not now speak of the administration of our various Crown Colonies and Dependencies, or of the regulation of the external relations of the great self-governing Colonies ; I have said sufficient to show that to no subject which comes before the British House of Commons is it possible at present to give the amount of time and attention which that particular subject demands. Let us examine how our present system of government affects the various parts of the Empire, and why it is unsatisfactory to each part individually. Ireland suffers most under the present system ; let us therefore take the case of Ireland first. I do not intend to enter at any length into the Irish question now, though it still occupies first place in the Liberal programme, because I have dealt with it very fully elsewhere. What are we doing in Ireland ? We are persisting in governing the country in direct opposition to the wishes of the people as expressed through their representatives, in refusing to recognise what is, in my opinion, the first principle of Imperial Government — viz. IMPERIAL GOVERNMENT 3 the right of each part of the Empire to manage its own local affairs. Some people will tell us that Ireland is not, and cannot be, a unit in herself, that she is only a portion of the United Kingdom, and that Englishmen and Irishmen can be gov- erned under the same laws and by the same body. That is an argument that has been often put to me, but if it is a sound contention, how comes it that measures are brought in to apply to Ireland, which are not applied to England ?- — how comes it that measures are passed which apply to England and Wales, and which do not apply to Ireland ? The truth is that Ireland is a country whose con- ditions essentially differ from those of England, and demand special treatment. Let us recognise, in the case of Ireland, that Irishmen know how best to manage their own local affairs, but, while keeping before us the first principle in any future Home Rule Bill, let not the other two principles of Imperial Government be forgotten. Ireland must have a Legislature of her own for the trans- action of her own special business; but, at the same time, she must continue to take her proper share in the management of Imperial affairs, she must continue to bear her fair share of the cost of the Army and Navy, which are to defend her as well as Scotland and England. The Home Rule Bill of 1886 was, in some respects, a retrograde measure, in that it placed Ireland in a position worse than that of a Crown Colony. No taxation without representation is 4 PROBLEMS OF EMPIRE an old axiom of the British Constitution. Under that Bill, Ireland was still to bear her share of the cost of Imperial defence, but she was to have no voice in the control of the expenditure, she was to have no voice in the direction of the foreign policy, which was to affect her as much as England. Sir Charles Russell was one of the very first to point this out, and in any future Home Rule Bill we may rest perfectly assured that this defect will be remedied. Ireland, as I have said, is most dissatisfied with the way her affairs are managed by the present Imperial Parliament, but in Scotland and Wales this feeling of dissatisfaction is increasing too. The demand for Home Rule is growing. Surely the Crofter question, or any other purely Scotch question, will be infinitely better dealt with in an assembly of Scotchmen, intimately acquainted with the wants of their country, than in an heterogeneous assembly of people, most of whom take only an indirect interest in the subject. The same may be said of Wales. The consideration of how our system of Imperial Government affects us Englishmen is the most important to all of you in this hall. At present we find that a large proportion of the time of our representatives in Parliament is taken up in dealing with Irish, Scotch, or Welsh business, with matters which only indirectly concern our- selves. We, as Liberals, maintain that purely Irish questions should be decided according to IMPERIAL GOVERNMENT 5 the wishes of Irish people. As a Liberal, again, I have pledged myself to vote on the question of disestablishment in Wales, according to the clearly expressed views of the Welsh people ; and I have given a similar pledge with regard to disestablish- ment in Scotland, when the opinion of Scotchmen on that question is equally clearly expressed. But has it never struck you that these Liberal principles we profess might be applied even nearer home ? If the Irish have a right to manage their own affairs, have not we Englishmen a right to manage our own affairs ? Do we want Irishmen and Scotchmen to help us to decide what form free education is to take in our English elementary schools ? Should the question of the disestablish- ment of the Church in England come up for decision, is that question to be in great part decided by the votes of Irish Roman Catholics, Scotch Presbyterians, and Welsh Dissenters ? In my opinion emphatically No ! Questions which affect England alone should be decided according to the views of the English people. Therefore, I advocate Home Rule for England as well as for Ireland, Scotland, and for Wales, and in doing so, I no more than follow an accepted principle of the Liberal party. Let us turn to the great self-governing colonies in North America, Australia, and South Africa. Surely the issue on which the general election in Canada was fought three months ago, the issue on which the general election in New South Wales 6 PROBLEMS OF EMPIRE has just been decided, the visit of the young and able Premier of South Africa to this country, should awaken the most serious attention to the relations between the Mother Country and her Colonies. The issue in Canada was whether there should, or should not, be unrestrained reciprocity with the United States. The party led by Sir John Macdonald maintained that complete reciprocity with the United States meant ultimate absorption in the United States. Though his opponents disclaimed any intentional disloyalty to the Mother Country, the Canadian people decided that Sir John Macdonald was right in his contention. In New South Wales the issue was more direct. Sir Henry Parkes, the G.O.M. of Australia, as he is often called, put forward the proposal for Australian Federation, as a Federation under the Crown ; Mr. Dibbs, the leader of the Opposition, went for Federation and Independence. Sir Henry Parkes has been returned with thirty-eight of his supporters ; Mr. Dibbs has lost his seat, and only nineteen of the Opposition have been elected. The results of these elections are satisfactory ; but they do not remove the necessity for seriously considering our position. In each of these groups of colonies there are responsible legislatures, which make what laws they please for the internal government of their respective colonies. At the head of each it is true there is a governor, who acts as deputy of the IMPERIAL GOVERNMENT 7 Queen. The external affairs of the great Colonies are in the hands of the Colonial Office, subject to the more or less imperfect scrutiny of Parlia- ment. We all know that a government office will do almost anything to avoid inconvenient questions in the House of Commons, and its action is largely governed by the principle of ' let sleeping dogs lie.' The Colonial Office is no exception to the rule. Colonists have no constitutional way on ordinary occasions of making their voices heard. If they make representations to the Colonial Office, the Colonial Office will turn a deaf ear until a powerful agitation is got up in the colony interested, until an immense amount of ill-feeling and disloyalty to the Mother Country is aroused, which has sometimes culminated in the hauling down of the national flag by an excited populace. There have been instances of this in Australia, South Africa, and North America in the last few years, and in South Africa and North America in the last year. By the time the agita- tion reaches to the height of lowering the national flag, the attention of Parliament and the electors of this country has been aroused, and the Colonial Office has been convinced that some action must be taken. Many instances could be quoted to show what I mean. One which I often quote, because I happened to be in Australia when the feeling on the subject was at its height, is the way in which the Home Government dealt with the annexation of New Guinea and the transportation 8 PROBLEMS OF EMPIRE of French convicts to New Caledonia, whence they escaped to the mainland of Australia. The feelings aroused at that time in Queensland have rankled ever since, they have borne fruit on more than one occasion, and it will be many a long year before they completely die out. There is an excellent illustration of the way in which our Empire is governed at present, which has had a large place in the columns of the daily press and which has, during the present session, occupied the attention of both Houses of Parlia- ment. I refer to the case of Newfoundland. I do not intend to enter into the history of this ques- tion. The position may be briefly summarised thus : The French have undoubted treaty rights on a portion of the shores of Newfoundland, which have become absolutely intolerable owing to an expansion of population which was never dreamt of at the time that treaty was made, or even at the periods when it has been since confirmed. The way in which these treaty rights have been enforced (the Newfoundlanders say, exceeded) by both French officers and the officers of H.M. ships has produced the gravest discontent in Newfoundland. More than a year ago that discontent was very serious, but nothing was done. During the winter the situation grew still more grave. Mass meetings were held at St. John's and elsewhere to protest against the action of the Home Government ; there was much talk of annexation to the United States, accompanied IMPERIAL GOVERNMENT 9 by the hauling down of the national flag, which is becoming only too common in cases of this kind. At the beginning of this year, the House of Assembly began to pass unanimous resolutions on the subject. The Colonial Office became convinced that something must be done, and within the last few weeks the Premier of New- foundland has been heard at the bar of one of the Houses of Parliament, and some sort of temporary arrangement has been arrived at. I am now dealing with the Newfoundland question only as incidental to my main argument ; but, if I may be allowed to digress, I would say that this question, which has troubled English and French statesmen for more than a century, can only be settled satisfactorily to all parties concerned, on the basis of the complete extinction of the French rights on the shores of Newfoundland, which are almost valueless to the French themselves ; but, as I have said before, intolerable to the Newfound- landers. Sensible Frenchmen take this view of the case ; we must be prepared to make consider- able concessions elsewhere, but it is worth making a considerable sacrifice for the benefit of 200,000 of our English-speaking fellow-countrymen. Now the history of Newfoundland during the past year is, as I have said, only one instance of many that prove how unsatisfactory our present system is. We are brought to the conclusion that the ex- ternal relations of colonies inhabited by eleven mil- lions of free self-governing English subjects, nearly 10 PROBLEMS OF EMPIRE ten millions of whom are Englishmen, cannot be managed in a government office, supervised by an assembly in which not one of the Colonies immediately interested is represented. These relations are too important to be dealt with in this way. They must be dealt with by an assembly where the Colonies are represented. India is a very important part of the British Empire. We Englishmen have undertaken to govern in India a population about ten times our own number, a population which forms a very large part of the human race. The responsibility is enormous, and yet how much of the time of Parliament is given to the consideration of Indian questions ? At most, one or two days, and those at the fag end of a session, when half of the members have left. Parliament is practically absolute in dealing with India, and considering the imperfect knowledge and the insufficent opportunities of acquiring knowledge of Indian questions possessed by most Members of Parlia- ment, it is perhaps a matter of congratulation that the government of India is so largely left in the hands of that noble body of civil servants, who do now, as they have done for many years past, constitute one of the finest services that the world has ever known. But there are questions gradually rising above the horizon of Indian politics, too important to be decided by any body of civil servants, however capable, and still less by an assembly which has IMPERIAL GOVERNMENT 11 not the leisure they demand. The most important of these questions is how far the natives of India are to be admitted to a share in the government of their country. If that question could be decided by applying the principles of English politics to India, the solution would be com- paratively easy, but few people who have any knowledge of Indian matters would dream of suggesting such a solution. A movement has been in progress for some years past to urge the claims of the natives of India to representation in the government of their country, and the demands of the supporters of this movement have taken shape in the programme of the so- called Native Congress. It is to me clear that, as the logical outcome of our system of education, gradual concessions will have to be made to the demands of the party represented by the Con- gress ; and the representative principle may be partially introduced in the constitution of provin- cial councils. But any attempt to govern India, now or in the near future, through the medium of representative institutions, would, in my opinion, be absolutely impracticable. Those people who have profited most hitherto by our system of education are drawn from the weakest races of India ; and if we were to leave India to-morrow, those people who are loudest in their demands for representative government would be the very first to go to the wall, overwhelmed by the strong fighting races of the north and north-west. The 12 PROBLEMS OF EMPIRE problem is full of difficultj^ it demands the closest attention and the deepest study, which, under the present system of Imperial government, it cannot have from those who are ultimately responsible for the solution. I should look forward with grave apprehension to such a question being decided in an assembly where votes are mainly governed by considerations of party politics at home. Therefore, in my opinion, for the proper government of India, as well as for other parts of the Empire, a body must be constituted in which questions of great Imperial interest are decided by representatives from all parts of the Empire. There is another group of British possessions which are peculiarly under the government of the Colonial Office, and which have often reason to be dissatisfied with that government — I mean the Crown Colonies, the most important of which are the Straits Settlements, Ceylon, the West Indian Islands, and Mauritius. In nearly every Crown Colony, the white population bears a very small proportion to the natives, and is composed mainly of merchants, bankers, a few officials, and, in the West Indies, of planters. If the Colony has a grievance it is exceedingly difficult for it to bring that grievance before the attention of Parliament, which alone has power to remedy it. The Governor is absolute in his Council, which invariably has a majority of official members, and he can compel them to vote against their opinions and in accordance with the instructions IMPERIAL GOVERNMENT 13 of the Colonial Office on pain of dismissal from their offices. Agitation, such as we have seen is so common in the self-governing Colonies, would be too dangerous an example for a handful of Europeans to set to a large native population. The Colonial Office, therefore, can treat a Crown Colony almost as it pleases without fear of the consequences. Let me give one instance which will show you that the authority of the Colonial Office can be pushed to an extent that you may never have realised before. It is a question affecting the defences of the Colony of Singapore. In 1885, as a result of Lord Carnarvon's Committee on the coaling stations, an arrangement was arrived at by which the Colony of the Straits Settlements was to undertake the works of the forts, while the Home Government supplied the armament. Eighty thousand pounds was cheerfully voted by the colony for this purpose, and the works were completed, as I saw with my own eyes, long before the promised armament was ready. Early last year the Secretary of State claimed the following additional contributions : (a) £29,000 for loss on exchange. {b) £60,000 for five years for barracks. (c) £100,000 instead of £50,000 for military contribution. When the matter came before the Council the elected members protested against the vote of £100,000, but expressed willingness to agree to 14 PROBLEMS OF EMPIRE the two first demands. The vote was carried by the votes of the official members, and with regard to their votes the Governor said in his dispatch to the Secretary of State, ' I found myself unable to support all the claims which Her Majesty's Government had made, and the same views which I held were shared by every member of my Council. My instructions, however, were perfectly clear, and I had to require each member to vote against his conviction, and in support of the claims of Her Majesty's Government.' That is an instance of the way in which our Crown Colonies may be governed. It is the interest of few Members of Parliament to move in questions of this kind, because they know full well that few of their constituents have any knowledge of them or pay any heed to them. Therefore, in my belief, our system of Imperial Government is as bad for the Crown Colonies as it is for those other parts of the Empire that we have been discussing. We have seen that our system of Imperial government is unsatisfactory to our great self- governing colonies as well as to India and those parts of Greater Britain which are not able to govern themselves ; to the former because they have no constitutional share in that government, to the latter because their affairs are managed without the knowledge and attention which their importance demands. But is not the government of Greater Britain IMPERIAL GOVERNMENT 15 as unsatisfactory to us English Liberals as the government of Great Britain and Ireland ? We Englishmen do not wish to shirk our Imperial responsibilities. We know that it would be im- possible for our teeming population to exist in this small island if it were not for our great possessions in every quarter of the globe ; if it were not for our great over-sea commerce, which brings us the raw materials for our manufactures and the bread that we eat. We wish to see Greater Britain well governed, but we do not wish to have the time of our representatives in Parlia- ment occupied with the better government of Greater Britain to the exclusion of questions which intimately affect ourselves. Irish, Welsh, and Scotch affairs on the one hand. Imperial affairs on the other, will delay for many years those much-needed reforms which form part of the programme of the great Liberal party (to which I am proud to belong) if our present system is vmchanged. I therefore advocate, in the interest of England as well as of the British Empire, that Imperial affairs should be handed over to a body which from its constitution has the power, and from the nature of its functions has the leisure, to deal with them. That body must be composed of representatives from Ireland, Scotland, and Wales, from Canada, Australia, and South Africa, as well as from England. We must be prepared to give up our exclusive control of foreign affairs and the Imperial Army and Navy to this body. 16 PROBLEMS OF EMPIRE in which, for a time at any rate, we shall have a preponderating influence. I have shown you that this sacrifice is worth the making, but it can only be made on one condition. At the present time practically the whole cost of the Army and Navy (which not only defend our own coasts and our own commerce, but the shores of our remotest dependencies) is borne by the tax- payers of this country. It is the same with the cost of the diplomatic and consular services of which the Colonies derive the benefit as well as we ourselves. It probably has not struck many of the taxpayers that they are paying for defending people who are better able to pay than they are themselves. This state of things cannot long continue ; at any rate, when the British taxpayer comes to realise what an unfair arrangement it is to him. To those who assert that the Colonies will never contribute to the cost of Imperial defence, my answer is — they have already begun to do so. Melbourne and Sydney, which are secure bases for British commerce, are amongst the best-defended ports in the Empire. After the Colonial Conference of 1887 the Australian govern- ments, with one exception, agreed to bear a large proportion of the cost of a British squadron in Australian waters : and while the squadron is avowedly intended to protect, in the first instance, the shores of Australia, it as certainly assists in protecting British commerce in Australian waters. IMPERIAL GOVERNMENT 17 Though a commencement has been made in this direction, it may well be doubted whether the Colonies will undertake their fair share of the burden unless we give them further advantages than a voice in the control of Imperial questions. The self-governing colonies are nearly all rigidly protectionist, and it is said that all that they hope for from a connection with the Mother Country is the enjoyment of trade advantages. I am a staunch believer in the economic advantages of Free Trade to this country, even on the present one-sided system ; but, in my opinion, it is well worth considering whether we should not gain more than we lose if, by entering into reciprocal trade arrangements throughout the Empire, we induced the Colonies to bear their fair share of the cost of Imperial defence. In the present state of public opinion on fiscal matters in this country such an arrangement may be impracticable. It is a problem which will undoubtedly have to be faced sooner or later, if this Empire of ours is to be kept together, and it is a question on which the electors of this country will have to make up their minds. Lord Salisbury told the deputation of the Imperial Federation League, introduced by Lord Brassey, that it was due to an extravagant modesty on their part that they had no definite scheme to propose. He then proceeded to state what ap- peared to him to be the difficulties of the problem. Though I have endeavoured to point out a practical 18 PROBLEMS OF EMPIRE remedy for some of the difificulties of Imperial government in relation to local self-government, for the difficulties indicated by Lord Salisbury I have put forward no practical solution. The ZoUverein we have already put on one side. But for a Kriegsverein, or union for the defence of the Empire, we see our way to a practical step partly suggested by the arrangement adopted at the last Colonial Conference of 1887. At another Colonial Conference the following proposals can be made : — Delegates to be appointed by the legislatures of the various self-governing parts of the Empire to an assembly which shall have control of (a) foreign relations ; (&) India and the Crown Colonies ; (c) Imperial defence. Grants to be made by the legislatures of the various self-governing countries for the purposes of Imperial defence, over which the aforesaid Imperial assembly shall have absolute control. The amount of repre- sentation and contribution to be determined at the conference, and the arrangements to be ratified by the various legislatures. The arrange- ment to be subject to revision at the end of ten years. Now, in placing the three principles of Imperial government before you to-night, I have shown you that it is not only to the advantage of Ireland but to the advantage of England that the first of these principles — viz. the right of each self-governing part of the Empire to manage its own local affairs — should be adopted. I have shown you that it IMPERIAL GOVERNMENT 19 is not only to the advantage of India and the Colonies, but to the advantage of England as well, that matters of Imperial interest should be managed by a body properly constituted to deal with them. I have shown you that if we do give up our exclusive control in these matters, the Colonies must relieve us of that part of taxation which we bear on their behalf. I have addressed myself mainly to you as Liberals who wish to see Parliament free to devote its attention to English domestic problems. I have been told that the British elector cares for absolutely nothing that does not touch his own immediate interests. It may be the case that the British democracy is in ordinary times the most unpatriotic of people ; but I am perfectly certain that there is a deep latent feeling of patriotism which is aroused when the occasion demands it. I am confident that there are few Englishmen who can read the history of the building up of this Empire of ours without a feeling of just pride. Does not the growth of Canada and Australia, the work above all which we have done in India, awaken the most serious consideration as to the moral responsibilities of our race ? We have shown we have a genius for self-government, and for the government of native races, which no other nation has possessed ; we should not shirk the responsi- bilities, to the whole as well as to the various parts. We have an immense task to perform for the peace and civilisation of mankind, if we only c a 20 PROBLEMS OF EMPIHE have the will to undertake it. A united British Empire will represent interests so varied that it will be sincerely desirous of peace. On the other hand, it may in time become so powerful that, as Lord Rosebery has finely said, without its consent no shot will be fired in anger throughout the habitable globe. THE PRINCIPLES OF IMPERIAL DEFENCE (From the Nineteenth Century, July 1893) The gross cost to the British taxpayer of defending the British Empire amounted, for the year 1892- 93, to over 35|- millions of pounds, 2o|- millions of which (in round numbers) were devoted to expenditure on the Army, and 15 millions to expenditure on the Navy. The Estimates for these two great services are passed through Parliament year after year with some slight criticism on points of detail. It is a cogent argument in favour of the policy of such measures as the Naval Defence Act that it compels Parlia- ment from time to time to consider broadly the requirements of the country for the purposes of defence. On ordinary occasions few of those who are responsible for granting these enormous sums of money, fewer still among the general body of taxpayers, have paused to consider whether we are proceeding on the right principles in allocating the expenditure. It is true that there is a general feeling that for the 20 millions spent on the Army, the most efficient part of 22 PROBLEMS OF EMPIRE which is in India, and is paid for by the Indian taxpayer, the nation by no means gets its money's worth. Lord Hartington's Commission, composed though it was of able men, after conducting an exhaustive inquiry into the whole subject, was able to suggest little in the way of reform. Sir George Chesney, Mr. Arnold Forster, and ' Vetus ' in the Times, could only point out defects of administration. One writer who has gone to the root of the matter has shown that, untU the British people and British statesmen make up their minds as to the part they expect the Army to play in the defence of the Empire, our military expenditure is likely to continue wasteful and misdirected. There are three forms of attack which we must be prepared io meet in the event of war with a first-class European power : attacks on commerce, attacks on colonies and depen- dencies, invasion. In former wars in which we have been en- gaged, our commerce, though suffering heavy losses, steadily increased in volume. In any war of the future no one can doubt that our commerce will be much exposed to attack. The British Empire, according to Lloyd's Register, possesses, at the present time, more than half the total merchant tonnage of the world. Nearly two-thirds of the tonnage of steamships, which are generally considered to possess three times PRINCIPLES OF IMPERIAL DEFENCE 23 the carrying efficiency of sailing-ships, is owned in the British Empire. Turning from shipping to cargoes, the total trade of the British Empire in 1890 amounted to nearly ;^i, 200,000,000 — £750,000,000 representing the share of the United Kingdom alone. The trade of the United Kingdom is of vital importance. One hundred years ago England was nearly, if not quite, self-supporting. To-day we are not provisioned for more than six weeks or two months. The young school of naval officers, lead by Admiral Aube, has laid it down that the naval force of France when employed for offensive purposes should be concentrated on the attack of British commerce. Admiral de la ReveiUere, in a recent article in the Marine Frangaise, observes : ' La Jeune Ecole se trompe assure- ment sur la portee de ce genre de lutte quand elle s'imagine, avec quelques torpilleurs dans la Manche et quelques croiseurs tres rapides, con- damner I'Angleterre a perir d'inanition ; mais ce n'en est point moins le vrai moyen de combattre.' In adopting the ' guerre de course ' as the be-all and end-all of their policy, the naval strategists of the Jeune Ecole hardly pay sufficient regard to the teachings of history. The whole maritime energies of the French Republic after the battle of June I, 1794, and of the French Empire after the battle of Trafalgar, were directed to the subjugation of England through the destruction pf her commerce. The command of the sea was 24 PROBLEMS OF EMPIRE not disputed. British fleets and British cruisers, were, if possible, to be avoided. The first prin- ciple of naval warfare was sacrificed to an ulterior subject. Captain Mahan, in his recent work, has conclusively shown that, in thus acting, the French government singularly failed to attain the object which they had in view. British commerce, indeed, suffered numerous losses at the hands of French ships and French privateers throughout the war, but its steady ebb and flow was never seriously affected by these means. The number of British merchant vessels captured during the twenty-one years 1793-1814 amounted to 11,000 ; the average number of ships entering and clearing the ports of Great Britain, exclusive of the coasting trade, amounted annually to 21,000. From these and other considerations Captain Mahan draws the conclusion ' that the direct loss to the nation by the operation of hostile cruisers did not exceed 2^ per cent, of the commerce of the Empire ; and that this loss was partially made good by the prize ships and merchandise taken by its own naval vessels and privateers.' It should be further observed that the total number of vessels belonging to the British Empire rose from 16,875 in 1795 to 22,051 in 1805, and 23,703 in 1810. What was the result of the war to our opponent ? Before the Revolution, Admiral de la Reveillere asserts that the commerce of France equalled that of PRINCIPLES OF IMPERIAL DEFENCE 25 England. The revolutionary war had not been long in progress before the French Directory- was constrained to admit (in 1799) that 'not a single merchant-ship is on the sea carrying the French flag.' The history of the great war established beyond contravention the principle that no serious interruption to commerce is possible by the naval forces of a power which has not first obtained the command of the sea. It illustrates the fallacy of the idea that England can be reduced to scarcity while the relative strength of the two navies remains as it is now. On this point Admiral de la Reveillere is again worth quoting : ' S'imaginer que nous pourrons suffisamment bloquer les cotes anglaises pour reduire le pays a la famine ... est une idee qui ne penetrera jamais dans une tete saine.' In any future war in which the British Empire may become involved, British commerce wiU un- doubtedly suffer losses ; their number and extent will depend on the strength and efficiency of the British Navy ; but it is only in the case of that strength being allowed to fall to a point which will leave the command of the sea in doubt that British commerce can be seriously interrupted. In such a case it is idle for British merchants to talk of securing the safety of their trade under a neutral flag. No power with which we might be at war would respect the neutral flag where ships were carrying food supplies absolutely vital to the existence of the 26 PROBLEMS OF EMPIRE enemy. Place the command of the sea in doubt, and the ruin of British commerce and the British Empire is assured. Of all the colonies and dependencies of the British Empire, India and Canada alone are open to serious attack by land. Though the Navy is powerless to prevent these two great British possessions from being attacked, the power to defend them depends absolutely on the command of the sea. In the event of war with Russia we can place reinforcements to our army on the north- west frontier of India far more easily, far more cheaply, and probably more expeditiously than the Russians can bring forward their invading forces. Deprived of the power of reinforcing the army in India by sea, England's hold upon India is gone for ever. The contingency of war with the United States no Englishman cares to con- template. Should Canada be ever again liable to invasion, our power of defending Canadian soil depends, as in the case of India, on the power of transporting British troops by sea. Canada is defended from the attack of any other power but the United States ; Australasia and South Africa are secure from the attack of every power, by the fact that they are of large extent and occupied by a numerous and friendly population. An army of 50,000 men^ would be required to conquer and hold either of these great colonies ' The South African War, 1899-1902, proved that an invading force of 50,000 men would be quite inadequate. PRINCIPLES OF IMPERIAL DEFENCE 27 or dependencies. Such a force cannot be trans- ported across the ocean by surprise. To make the attempt while the command of the sea was in doubt would be madness. Canada, Australia, South Africa, and, we may add, India are by many considered liable to serious attack by hostile navies, which would assail their ports and prey on the shipping on their coasts. Halifax is the only port in these colonies which can possibly be considered within the radius of action of fleets in European waters. The ports of the Cape Colony, of India, of Australia and New Zealand, possess an important element of safety from attack in their distance from Europe. The bases of the enemy in their neighbourhood are few. The naval force maintained by foreign powers in the Eastern seas, whether in the Indian Ocean, in the China Sea, or the Pacific, is quite insignificant compared with that main- tained by the British Empire. It is clear that no power could withdraw a fleet of iron- clads for operations in distant seas without abandoning to us the absolute command of European waters and without setting free a proportionate number of British battleships. Attacks on commerce by one or two cruisers, keeping generally out of sight of the coasts, are the most probable form which the operations of an enemy would take on the coasts of India, Australia, or South Africa. Occasional raids on 28 PROBLEMS OF EMPIRE territory might be made with the object of obtaining supplies ; but it may be safely asserted that few captains of cruisers would waste am- munition on bombardment with the chance of falling in with an enemy's cruiser before they could return to their base to obtain a fresh supply. Against attacks on commerce the best form of defence is an active naval defence, by ships which are able to pursue and fight the cruisers of the enemy wherever they may be found. In accepting the localisation of the vessels of the special Australian squadron in deference to the wish of the Colonies, we have acted on a principle unanimously condemned by students of naval strategy and we have seriously hampered the utility of such a squadron. The naval defence of Australasia and Australasian commerce is amply provided for. A few guns to deny the ports to the cruisers of the enemy are all that is required on shore. Unfortunately, at Melbourne large sums of money have been spent on providing a defence sufficient to keep a fleet of armour-clads at bay. In other words, Melbourne is defended against an attack which it is inconceivable could be made upon it under present conditions. Our minor possessions divide themselves into colonies and coaling stations. The former have no local defences ; they depend for their immunity from attack on the power of the British Navy. The latter have been lately provided with modem PRINCIPLES OP IMPERIAL DEPENCE 29 defences in accordance with the recommendations of Lord Carnarvon's Commission. Our most important coahng stations are on the routes to the East : on that via the Suez Canal, Gibraltar, Malta, Aden, Ceylon, Singapore, Hong Kong ; on that via the Cape of Good Hope, Sierra Leone, Ascension, St. Helena, Cape Town, Simon's Bay, and Mauritius. In the West Indies we have Port Castries (St. Lucia) and Port Royal (Jamaica) ; in the North Atlantic we have Bermuda ; in the South Atlantic we have the Falkland Islands — an important station as yet undefended. Of all our coaling stations, Gibraltar and Malta alone can be considered open to attack by a powerful fleet, and against such an attack they must be defended. The Straits of Gibraltar is by far the most important strategic point in the British Empire. Gibraltar is insecure and incon- venient in many respects as a port, but for want of a better in the immediate neighbourhood it is the base on which must rest that British fleet on which the main burden of the defence of the Empire will fall. It must also be the base for the cruisers protecting our trade with the East, whether by the Cape of Good Hope or the Suez Canal, and the trade with South America. While the strategic importance of Gibraltar is absolute, that of Malta is only relative. It is a convenient base for operations in the Eastern Mediterranean, and for protecting the Medi- terranean trade. After Gibraltar the Cape of 30 PROBLEMS OP EMPIRE Good Hope is the most important strategic point in the British Empire. Some, indeed, would place it first. As a base for cruisers protecting trade this may be true ; but, while Gibraltar has very great importance in this respect, as an indispensable base for our fleets it is without a rival. The strategic importance of our other coaling stations as protecting one or other of our trade routes is sufficiently obvious. Of those the defences of which have not yet been undertaken, it may be observed that Esquimault is of little value except for the deposits of coal at Nanaimo, and for the fact that it secures the Pacific end of the great Canadian line of communication against attack from any other power but the United States. Esquimault is ill situated for protecting British trade with the West Coast of America ; and Canadian trade with China and Japan, though growing, is as yet of slight importance. It is clearly a position which, if worth defending at all, should be defended almost entirely at the cost of the Colonial Government. The Falkland Islands are the only base from which protection can be afforded by our cruisers to the homeward- bound trade ^ from Australia and to the important trade with the West Coast of America. Most of our coaling stations proper are islands, and Aden and Sierra Leone are practically cut off from the rest of the world" except by sea. Gibraltar is the single exception, and it is only Instill largely carried in sailing vessels in 1893. PRINCIPLES OF IMPERIAL DEFENCE 31 in the improbable contingency of war with Spain that Gibraltar can be considered as anything but an island. The power to hold our coaling stations, therefore, depends absolutely on the possession of the command of the sea. In the wars of the French Revolution and Empire we were long, far too long, before we bent our energies to the task ; but by 1812 the colonies of France, of Holland, and of Denmark had fallen before the British arms. Issuing from the Isle de France and the French West Indies, French privateers had done considerable harm to British commerce. They were opposed with energy by our cruisers, but it is difficult to understand why the attempt was not made earlier to capture these important hostile positions. Bases for ships operating at a distance from the Mother Country are far more necessary than before the introduction of steam. Sailing-ships could, and did, remain at sea for many months at a time. Their power to remain at sea was only limited by the amount of water they carried. The period during which a modern ship of war can remain at sea is determined mainly by her coal endurance ; and, to a great extent, by the necessity of effecting repairs in port to delicate machinery. The coal endurance of modern ships of war is even more limited than official figures, so far as any are available, lead us to suppose ; and when Lord Salisbury placed the limit of the striking distance of a ship of war at 2000 miles — 32 PROBLEMS OF EMPIRE viz. the distance at which she could dehver a blow and return to her port — he certainly did not under-estimate her powers. The country which possesses the most numerous coaling stations and the best situated as regards trade routes will have a great advantage in a future war. In this respect the British Empire is without a rival. While a navy depends for its power of operating in distant waters very largely on coaling stations, the existence of the latter depends absolutely on the power of the fleet to protect them. No local defence, whether in fortifications or men, will preserve them to a power which has lost the command of the sea. The history of Malta during the great war affords an admirable instance of the interdependence of fleets and coaling stations, though it must be admitted that the lesson to be drawn is to some extent weakened by the need of modern ships for coal. Many people consider that the possession of Malta is indispensable to the maintenance of British in- fluence in the Mediterranean. How far this is true may be judged from the fact that Nelson won the battle of the Nile when Malta was in the hands of the French, and that Malta fell into our hands, though not for some time, as the direct consequence of that battle, which gave us the command of the Mediterranean. Captain Mahan summarises the conclusions which should be drawn in these words : * Its PRINCIPLES OF IMPERIAL DEFENCE 33 fate, when in the hands of France . . . gives warning that the fleet depends less upon Malta than Malta on the fleet.' If this be true of Malta, it is still more true of other coaling stations which do not lie in such proximity to the ports of foreign countries. We have acted wisely in giving to our coaling stations sufficient defence against one or two hostile cruisers. More than this is not required. As long as our Navy is maintained at its proper strength, and is efficiently officered and manned, it should not be possible for a serious expedition to leave the enemy's port without a British fleet being immediately in pursuit. The local defences of the coahng stations throughout the Empire are in the hands of the Army — a pohcy which is not adopted by other nations. To this system many object on the grounds (i) that their defence more properly belongs to the sphere of the Navy ; (2) that the Navy possesses in our magnificent marine corps a force which is far better adapted to the garrisoning of isolated and distant coaling stations than a short-service army. It is urged, and urged with force, that it must be absolutely destructive to the efficiency of a regiment to place three companies in garrison at Mauritius, one company at St. Helena, and the remaining companies at Cape Town — roughly 2000 miles away from either of the detachments. The principal obj ections to a change come from naval officers themselves, who consider that, if responsible for the defence 34 PROBLEMS OF EMPIRE of coaling stations or coasts, they would be tempted to keep their ships in the neighbourhood of their ports, instead of pursuing the enemy wherever he might be found, and making, as we have done in past years, our frontier line our enemy's coast. Though much money may be wasted under our present system in providing defences, whether forts or submarine mines, which the circumstances do not require, the naval objection to a change of system must be admitted to be of great force. ' If, for the protection of our commerce, our Colonies, and coaling stations, we depend in great measure on the Navy, still more do we do so for protection against invasion. The ideas put forward by the author of the ' Battle of Dorking,' to a large extent, prevail. Our military authorities have, in the last few years, elaborated a system of defence for the metropolis ; large sums of money have been lavished on forts, intended to protect Chatham, Portsmouth, &c., from the attack of an invading army. It is surely better to prevent an enemy from landing than to take elaborate and costly measures to meet him after he has landed. ' Aucune personne de bon sens ne songera a nous voir assez maitres de la Manche pour operer un d^barquement et pour ravitailler une armee debarquee.' So says Admiral de la Reveillere in the article already quoted. In England it has been generally the practice of late years to estimate the probabilities of PRINCIPLES OF IMPERIAL DEFENCE 35 invasion in defiance of the lessons of our history. Two hundred years ago Lord Torrington demon- strated the value of the ' Fleet in being ' as an absolute protection against invasion, as has been so well pointed out by Admiral Colomb. For nearly two years Napoleon lay encamped on the heights above Boulogne with over 130,000 of the flower of his army, waiting for that opportunity which never came ; and it must be remembered that Napoleon had one chance of success which cannot occur again. The boats and vessels in which the invading army was to be embarked could be propelled by means of oars ; the British ships which were to destroy them were mainly dependent on the wind. In a calm it was possible for the Boulogne flotilla to have moved without the British ships being able to reach them. Such a chance of success is not possible in these days of steam. In the fine passage with which he opens his account of the history of these two years. Captain Mahan points out how the British fleets, which by Lord St. Vincent's strategy were continually main- tained before Brest, Rochefort, Ferrol, and Toulon, were the real obstacles to the army of invasion. Our greatest naval victory won by our greatest naval hero was merely an incident in that well- planned campaign. The battle of Trafalgar was not necessary to prevent England being invaded, but it did render the prospect of invading England hopeless. 36 PROBLEMS OF EMPIRE As it was then, so it will be again to-day. In the event of war with France — and France is the only power whose fleet gives her the least prospect of being able to invade Great Britain — our protection against invasion will not consist in forts on the English coast, however well manned and however well armed. By far the finest portion of the French Navy is now in the Medi- terranean. The force maintained in the ports on the Atlantic and the Channel is comparatively insignificant. Our energies will be devoted to keeping the Mediterranean squadron in port ; and if, as many naval authorities now hold, a blockade is no longer possible, we must bar the passage into the ocean through the Straits of Gibraltar. As in the days of Napoleon, so now, we shall hold the interior position and be able to combine our fleets at will. Our defence against invasion will rest primarily with the Mediterranean fleet. If that fleet is defeated in battle, and such a contingency has to be contemplated, it will not be defeated without inflicting serious damage on its opponents. To provide against such a contingency the Navy must be of sufficient strength in battleships to admit of a reserve squadron being maintained, capable of meeting the French Mediterranean fleet after it has been in conflict with our own. ' No amount of foresight or calculation,' Lord George Hamilton has said, * can anticipate naval combinations and naval movements ; therefore PRINCIPLES OF IMPERIAL DEFENCE 37 it seems to me essential that, for the purpose of meeting such unexpected blows, we should have a considerable margin of reserve.' There is one form of attack which does not fall under any of the three heads under which we have been considering the principles of Im- perial defence. The British naval manoeuvres of the last three years have shown : (i) that the English shores of the Channel are well within the range of torpedo-boat attack from the stations which have been recently established from Dunkirk to Brest ; (2) that the mere menace of torpedo-boat attack is sufficient seriously to retard the junction of two powerful fleets. In view of our recent experience, it is probably true to say that the principal danger we have to fear in the event of war with France is an attack by torpedo-boats on our assembling fleets at Plymouth, Portland, or Spithead — similar to that made by Captain Barry's flotilla on Sir George Tryon's fleet in Plymouth Sound in the manoeuvres of 1890. An offensive defence, it was clearly shown by the manoeuvres of i8gi, is the best way of meeting such an attack. We must have numerous ' torpedo-boats destroyers,' fast enough to catch, and powerful enough to destroy, the torpedo-boats of the enemy. We may congratulate ourselves that a first step has already been taken in this sound line of policy. More than this is required by the circumstances of the case. The anchorages at our Channel 38 phoblems of empire naval ports sorely need additional protection, by means of breakwaters/ against an attack to which they are at present so much exposed. The principles of Imperial defence may be summarised by considering what our objective is to be in time of war. Our first and principal object is obviously to defeat the enemy's main fleet in battle or to completely checkmate its operations. An effective army, powerful forti- fications, superiority in cruisers, will not com- pensate for a deficiency in the line of battle. Battleships alone can give us that command of the sea which is indispensable alike to the safety of our commerce, our colonies and de- pendencies, and the shores of the United Kingdom. Our secondary object must be to maintain a sufficient force of cruisers to deal either with hostile cruisers designed to prey upon our commerce, or with expeditions intended for the attack of colonies, which might escape our principal fleets. It is a sounder and cheaper policy to endeavour to deal with these at the point of departure than to provide elaborate defences to meet them on arrival at their destina- tion. The cruisers defend not only the point to be attacked, but they also secure the integrity of the trade routes over the ocean. Our third object should be to capture the coaling stations and colonies of the enemy which are indispensable to his depredations on our commerce. This is 1 These have been constructed at Portland, &c. PRINCIPLES OF IMPERIAL DEFENCE 39 an object, as has already been stated, to which the attention of those responsible for directing the forces of Great Britain, in the great war, were not early enough directed. How many millions of pounds would have been saved if we had earlier seized Mauritius, Martinique, and Guadaloupe ! In this connection Captain Mahan points out that, contrary to the general principles of strategy, whether military or naval, for a power which has command of the sea, dissemination of force within reasonable limits is advisable. Convenient harbours for coaling, &c., in all parts of the world are indispensable to attacks on a commerce so widely distributed as that of the British Empire. Deprive the enemy of these, and his attacks on commerce are to a great extent rendered impossible ; but without some dissemination of force such a policy cannot be carried out. Mr. Shaw Lefevre said in the House of Commons on May 7, 1889 : ' France has greatly increased her empire, not only in China and Tonquin, but in Africa, and has extended her interests in other parts of the world ; and in the event of a war with this country all these interests would be jeopar- dised, and in a very short time France would be cut off from her communication with all her outlpng dependencies in different parts of the world.' When we hear that the French have occupied 40 PROBLEMS OF EMPIRE the Kerguelen Islands, St. Paul and Amsterdam — which, by the way, are marked as British possessions in most English maps — or that the United States contemplates the annexation of the Sandwich Islands, it should not give us dissatisfaction. Such acquisitions only increase the vulnerability of states whom we are prac- tically powerless to injure in their own territory. In view of the military forces now maintained by Continental powers under a system of con- scription, extended operations on the Continent are no longer conceivable. The part which the British Army can play in a war with a first-class power is only a secondary one, except in the case of war with Russia or the United States. Though secondary, it is stiU important. The Army has not only to defend our own coaling stations : it wUl have to co-operate with the Navy in the capture of the colonies and coaling stations of the enemy. The capture of St. Pierre and Miquelon, of Diego Suarez or New Caledonia, would not, perhaps, be great achievements for the British Army, but the conquest of Algeria would test its powers to the utmost. With Algeria hostile in time of war, the trade route up the Mediterranean could never be absolutely secure, and it might be advisable to abandon it altogether. For the Eastern trade this would only mean serious inconvenience. For the trade with the Mediterranean and Levant it would mean absolute extinction for the time — and PRINCIPLES OF IMPERIAL DEFENCE 41 British trade with the Mediterranean bears a large proportion to the total trade of the country. To those who have studied and grasped the principles of warfare which are applicable to a sea power like Great Britain — principles which we have to thank Captain Mahan for so clearly setting forth — the relative proportions of naval and military expenditure in the British Empire appear strange indeed. If these proportions were reversed, the British Empire would be infinitely better defended than it is at present.* For our naval expenditure we obtain a navy powerful indeed, but by no means sufficient for our needs. For our military expenditure we are able to provide the defences and garrisons of our coaling stations, we have a home army from which we hope to be able to reinforce the Army in India in case of need, but which is in any case most costly, and insufficient in numbers to undertake offensive defence. 1 Cf. p. 45. AUSTRALIA AND IMPERIAL DEFENCE (Extracts from an Address delivered before the Imperial Federation League of Victoria at Melbourne, October i8g6 1) We are met to-night under the auspices of the Imperial Federation League of Victoria. The Im- perial Federation League of the United Kingdom was dissolved two years ago. Many members of the League in the United Kingdom, and, I sup- pose, a majority of the members of the branches both in Canada and here in Victoria, disapproved of the dissolution. To devise a scheme of political federation was outside the scope of an irre- sponsible body of men, however representative. All the work that it was in the power of the League to accomplish in the United Kingdom, at any rate, has been done. Mainly through the efforts of the League a complete revolution of popular sentiment has been effected. The idea of the old Manchester School that the Colonies were a burden on the Mother Country, and should be cut adrift at the earliest possible opportunity, has completely died out. With few insignificant exceptions, statesmen, politicians, and pressmen, 1 This address was to some extent a r&sumS of the points given in the article reprinted from the Nineteenth Century. AUSTRALIA— IMPERIAL DEFENCE 4S of all shades of political opinion, are now looking to the maintenance of the union under one flag of the various communities which make up this Empire. Is not the sentiment of unity stronger in Canada, South Africa, and Australasia to-day than it was ten years ago ? When we were threatened on one side by the President of the United States, on the other by the Emperor of Germany, had the unanimous resolution of the Canadian House of Commons and the message of the Australian Premiers no significance ? From all that I have seen and heard in a recent journey across Canada, and since I have been in Australia, I am confident that the sentiment of loyalty is infinitely stronger - to-day than it was ten years ago. Nowhere is it more apparent than here in the colony of Victoria, a fact which may be attributed in great measure to the ex- cellent teaching of geography and history in your State schools, just as I believe the hostility to Britain, which undoubtedly exists among large sections of the people especially in the central and western states of America, is largely due to the manner in which history is taught in the public schools. Because we cannot look forward in the near future to any form of political federation, it does not follow that there are not other ways in which we may draw closer the ties that bind us together. Some people believe that we can best secure the unity of our Empire by strengthening 44 PROBLEMS OF EMPIRE our trade relations. This view is largely held in Canada, especially by the party which has just been defeated in the General Election. It is also held to some extent in the United Kingdom by those statesmen and others who have banded themselves together into the British Empire Trade League. The idea of a ZoUverein, or Customs Union, has apparently not found much favour in Australia. To discuss the trade relations and the trade policies of the various British dominions would take an address in itself. The trade to be attracted by any change in our fiscal policy is not the main volume which we possess already, but a small fraction. The chief object to be gained is that Australian, Canadian, and South African producers would receive an advantage in the markets of the Mother Country that would enable them to compete even more successfully than at present with other producers of food and raw material, whether in the Argentine Republic or in the United States, and that this would increase the attractiveness of British Colonies as a field for British settlement and the employment of British capital. Though a Liberal and though a Free Trader I might be prepared under certain circumstances to vote in favour of a Customs Union, but there is no indication at present that the people of the United Kingdom are prepared to revolutionise the fiscal policy under which the progress of the last sixty years has been achieved. AUSTRALIA— IMPERIAL DEFENCE 45 It is far more possible and of infinitely greater importance that we should be more closely united for the purposes of defence. Before we can come to any conclusion as to the part which each member of the British dominions ought to play in the defence of the whole, we must understand the general principles on which the defence of the Empire rests. It is for this reason that I propose to devote the main portion of this address to the consideration of these principles. The main principle which I wish to lay down at the outset is that the defence of the Empire rests absolutely on our power to retain the com- mand of the sea — in other words, on sea power. I do not wish to minimise the functions which the Army wiU have to perform in case of war, but I do wish to insist very strongly that no army which it is conceivable we could raise and maintain would compensate for inferior naval strength. To those who had grasped the principles of warfare which are applicable to a sea power like Britain, it appeared that if the relative proportions of naval and military expenditure which existed in 1892-3 were reversed, the Empire would be better defended. The proportions of naval and military expenditure though not reversed have been entirely altered in the last few years. The Navy Estimates for 1896-7 amount to £22,800,000 gross, or ;f2i, 800,000 net. The Army Estimates amount to £20,900,000 gross, £18,000,000 net. 46 PROBLEMS OF EMPIRE It is impossible to deny that the British Em- pire is better defended to-day than it was two years ago. In 1894 there were 46 battleships built and building for Britain as against 51 for France and Russia. In 1896 there are 55 battle- ships built or building for Great Britain against 50 for France and Russia. In first-class battle- ships we had, in 1894, 19 built and 3 building as against 15 built and 12 building for France and Russia. In 1896 we have 12 building and 22 completed as against 14 building and 15 completed for France and Russia. We owe the change that has taken place to the fact that the principles of Imperial Defence are becoming better understood. The deepest grati- tude of every Englishman is due to Captain Mahan of the United States Navy for so clearly setting forth those principles in his two admirable books. I will endeavour to illustrate the assertion that the defence of the Empire rests on sea power by considering the forms of attack which we may have to meet in case of war with a first- class European power, or combination of European powers. We shall have to meet attacks on com- merce, attacks on colonies and dependencies, and, possibly, invasion.^ The United States, it is true, were the first to lay down the type of fast and lightly armed ■ Cf. Paper on ' Principles of Imperial Defence.' AUSTRALIA— IMPERIAL DEFENCE 47 cruiser, represented by the Columbia and Minneapolis, which have a trial speed of close on twenty-three knots. They are classed as commerce-destroyers in the American Navy List, and are commonly called in America ' Pirates.' France has followed suit by laying down this year two cruisers of the same class, the Guichen and Chateau Renault. We can only judge whether the policy indicated by the construction of such ships is likely to be successful in the future by the experience of the past. In the years 1756-60 — that is during the Seven Years' War— 2500 British merchant ships were captured ; and in the year 1761, 800 out of the estimated total of 8000 British merchant ships, or 10 per cent., were captured by the cruisers or privateers of the enemy. Campbell, in his ' Lives of the Admirals,' says, ' The trade of England increased gradually every year, and such a scene of national prosperity while waging a long, costly, and bloody war was never before shown by any people in the world.' In commenting on the results of the war of 1778, Captain Mahan says, ' Especially is commerce- destroying misleading when the nation against whom it is to be directed possesses, as Great Britain did, and does, the two requisites of a strong sea power — a widespread, healthy com- merce and a powerful navy. Only by military command of the sea, by prolonged control of the strategic centres of commerce, can such an attack be fatal. Such control can only be wrung 48 PROBLEMS OF EMPIRE from, a powerful navy by fighting it and over- coming it.' It will be noted that though the number of British merchant ships had more than doubled between the first and last of the two wars that we have been considering, the estimated captures were reduced from lo to 2j per cent. The British merchant navy holds a higher position to-day than it has ever done before relatively to the merchant navies of other coun- tries. The aggregate merchant tonnage of the British Empire amounts to 10,512,272 tons, made up as foUows : The United Kingdom . . 8,956,181 Canada ..... 951,210 Australasia .... 359,614 British India .... 65,140 Other British Possessions . . 180,127 Total British Possessions . 1,556,091 Total British Empire . . 10,512,272 The aggregate tonnage of the merchant navies of all other countries amounts to 8,449,000 ; or, if we include vessels employed on lakes and rivers in the United States, to 10,305,000. Taking steamships alone, which are generally considered to possess three times the carrying efficiency of sailing ships, 6,377,000 tons are under the British, 3,624,000 tons are under foreign flags ; or, including vessels employed on the lakes AUSTRALIA— IMPERIAL DEFENCE 49 and rivers of the United States, 5,332,000 tons. The British Empire, therefore, possesses at the present time more than half the total merchant tonnage of the world, and nearly two-thirds of the tonnage of steamships. In any future war in which we may become involved, British commerce will undoubtedly suffer losses. Their number and extent will depend on the efficiency of the British Navy. Judging from the experience of previous wars, the losses will almost certainly be more numerous, but they should represent a less percentage of the whole. Canada and India alone of British possessions are open to serious attack by land. British South Africa has a long land frontier, but no first-class power could contemplate a serious attack except with troops transported over sea. The defence of Australia depends absolutely on the command of the sea, and this being the case, the localisation of the vessels of the special Australian squadron in deference to the wish of the Colonies is a grave mistake. I will en- deavour to give an illustration to bring this home to the minds of everyone in this hall. You know that during the past fortnight British and Russian fleets have been watching one another through the Dardanelles. If the British Government had followed the advice of Mr. Gladstone, there is little doubt that we should have been at war with Russia, and possibly with France as well, at this moment. The naval force, maintained by 50 PROBLEMS OF EMPIRE foreign powers in waters in the neighbourhood of Austraha, whether in the Pacific or Indian Ocean, is absolutely insignificant compared to our own. In China the Russian and French squadrons are equal, if not slightly superior, to the British squadron. They can oppose one battleship and five armoured cruisers to one battleship, three armoured cruisers and a first- class protected cruiser. If the British China squadron were to be defeated in battle, the command of the sea between Cape Horn and the Suez Canal would be temporarily lost. British commerce would be interrupted, and Australia would be liable to invasion by Russian troops from Vladivostok, or French troops from Saigon. The squadron now in Australian waters would be powerless to prevent it. I have no hesitation in saying that if the British China squadron were immediately reinforced on the outbreak of war by the flagships here and in the Pacific, it would have a reasonable prospect of defeating, or of at any rate holding in check, the combined squadrons of France and Russia. There would most probably be a great popular outcry against any such action on the part of the Admiralty, but it is absolutely certain that the Orlando and Warspite would do more to defend the coasts of Canada and Australia in Chinese waters than they could ever do if they remained in Canadian or Australian waters. Against small raiding expeditions, accompanied by troops which are AUSTRALIA— IMPERIAL DEi^ENCE 51 not likely to, but still might, escape our cruisers, you in Australia must be prepared to defend yourselves by maintaining a military force, not necessarily numerous, but certainly efficient, and capable of taking the field against disciplined troops. Is our present standard of strength sufficient ? Our very greatness, the splendid growth of our self-governing Colonies under free institutions, the talent we have shown for the government of native races in Egypt and India, make us the most unpopular Power in the world. Hitherto the burden of defending this great empire has fallen almost exclusively on the inhabitants of the Mother Country. During the past two years we have added over £7,000,000 to our Navy Estimates alone, irrespective of £14,000,000, provided in the Naval Works Acts. In many of the Colonies, certainly in the Australasian colonies, expenditure on defence has been cut down, and the tendency seems toward still further reduction. You have been passing through a period of severe depression. We in the Old Country have had a revival in material prosperity. The addition to the naval expenditure has hardly been felt, certainly not by the general body of taxpayers. We have been able to hold our own weU up till now against our probable enemies, but should those enemies become more numerous at a time when commerce and industry are not E 3 52 PROBLEMS OF EMPIRE so prosperous as they are now, the British tax- payer may find the burden almost too heavy for his shoulders alone. Speaking as a representative of British working men, and putting it to you as purely an abstract question, is it just that we who live in the Old Country should contribute twenty times what you do to the common defence ? Is it right that the sons and the brothers of British workmen should uphold the British flag in every corner of the world, while, if I am to judge from what I sometimes read in Australian newspapers, it is considered unreasonable to expect an Australian to serve anywhere except in defence of Australia ? Though I am a member of the Imperial Defence Committee ; though I beheve that it is well that we should turn these questions over in our minds, I certainly deprecate the tone sometimes adopted by members of the committee in discussing this question . Believe me, Enghshmen as a body recognise that Australians as well as Canadians have done much for the defence of the Empire in the past. We do not forget that Melbourne and Sydney have been well defended at Colonial expense. We do not forget the presence of the New South Wales contingent in the Sudan, a great object-lesson to European nations of the unity of sentiment which animates all who live under the Union Jack. A contribution of ;^i35,ooo a year does not loom very large in Navy Estimates which amount to £22,000,000, but it is valuable as AUSTRALIA— IMPERIAL DEFENCE 53 the recognition of a principle and as an earnest of what our Colonies may some day be prepared to do. We shall not repeat the mistakes of the past. We do not, and we have no right to, expect that you will make any serious money contribution to the defence of the Empire untU we are prepared to give you a constitutional voice in the control of that expenditure. That is impossible under our present constitution. Looking to the future, many people will be disposed to agree with Lord Rosebery that ' in a full measure of devolution, subject always to Imperial control, lies the secret of the future working of this Empire.' No nation has ever attempted to deal with such multifarious ques- tions as we attempt to deal with in the House of Commons. It will be some years yet before we in the Old Country are able to draw the line between matters which are of Imperial, and matters which are of local, concern, as they do in Germany and in the United States. A delay of one or even two generations wiU give an opportunity for the population and resources of the Colonies to develop, and will place you in a position to enter into a political federation with the Mother Country on fairly equal terms. In the period of growth of her Colonies, it is clearly the duty of the Mother Country to under- take the main burden of defence ; but when you no longer require such a large proportion of your resources for the development of your 54 PROBLEMS OF EMPIRE territory, it is not unreasonable to expect that Colonial taxpayers will be prepared to stand shoulder to shoulder with the British taxpayer in bearing the common burdens, and that Colonial statesmen will be ready to take their place side by side with British statesmen in a parliament or council in which all parts of the British Empire shall be represented. Meantime your task in the common defence is to see that the forts which make Sydney and Melbourne two of the most strongly defended ports in the Empire, and which protect Thursday Island and King George's Sound, are kept properly armed and efficiently manned. If the Colonies wish to spend money on local naval defences for their ports, keep the force which is to man them efficient and contented. The Cerberus would probably act as a greater deterrent to hostile cruisers than the forts at the Heads. More important than either your forts or your ships are your military forces. You do not want a large force. What you have, let it be efficient,, properly equipped, and capable of taking the field against disciplined troops. A small but efficient military force in these colonies would not only render you secure against any possible attack that might be made on your territory, but would also render valuable assistance in time of war by capturing the naval bases of the enemy in neighbouring seas. In time of peace popular opinion is often impatient of military expenditure, AUSTRALIA— IMPERIAL DEFENCE 55 and that is no doubt especially the case in these colonies, which have always been far removed from the strife of battle. Bear in mind the words of a distinguished president of the United States, ' A defenceless position and a distinguished love of peace are the surest invitations to war.' I have had unrivalled opportunities of seeing the British Empire. Let me say in conclusion that it is the highest ambition of my life to help to bind the Colonies and the Mother Country more closely together, and whatever may be my political career, I can undertake that my best energies will be devoted to that object. This is no more than could be expected from the son of your Governor, who, at a time of life when many men are looking to rest from their labours, left his home and his children, who were settled round him, to serve his Queen and his country for the sake of the cause which we both have so much at heart. FEDERAL GOVERNMENT FOR THE UNITED KINGDOM AND THE EMPIRE (Reprinted from Nineteenth Century, August 1901) Federal government implies local autonomy or Home Rule in the several States comprising the Federation. In this country Home Rule has been generally discussed with special reference to Ireland, but in the present article it is proposed to show that the adoption of a Federal form of government is becoming absolutely necessary both for the United Kingdom and the Empire.^ First, what was meant by Home Rule ? It has suited the Conservative party to describe the Home Ruler as a ' separatist ' ; but Home Rule, as understood by British Liberals, most assuredly did not imply separation either from Great Britain or from the Empire. It meant the right of Ireland to manage her own domestic affairs in her own way ; but it did not mean, as has been sometimes thought, the grant of the same powers 1 During 1900 and the two following years a very large number of meetings were addressed by Mr. Brassey and others in support of the policy suggested in this paper. The subject was twice brought before the General Committee of the National Liberal Federation. FEDERAL GOVERNMENT 57 of self-government as those conferred with such beneficial results on the great self-governing colonies. Owing to her geographical position, if for no other reason, it would be impossible to place Ireland in the position of a self-governing colony such as New Zealand. There are certain matters which always will be of common interest to the several countries of the United Kingdom, and which do not concern the people of Canada, Australia, or South Africa. The relations of the Irish Legislature to the Parliament of the United Kingdom (which is also at present the Imperial Parliament) would therefore be similar to the relations of the Provincial Parliaments to the Dominion Parliament of Canada, and to those of the Parliaments of Victoria, New South Wales, and other Australian colonies to the newly created Commonwealth Parliament. Two attempts have been made to devise a satis- factory measure of Home Rule for Ireland. Both have failed. In the Home Rule Bill of 1886, it was proposed to give Ireland the right to manage her own domestic affairs, but no provision was made for giving to Irish representatives a voice in the direction of Imperial policy, or of the affairs of the United Kingdom. By the omission of any such provision one of the fundamental principles of the British constitution, ' There shall be no taxation without representation,' would have been violated had the Bill become law. Ireland would have been taxed for Imperial purposes, but would 58 PROBLEMS OF EMPIRE have had no voice in the control of the money which she contributed. Before the election of 1892, Mr. Gladstone stated that in any future Home Rule Bill steps would be taken to remedy this objection, and the Home Rule Bill as introduced into Parliament in 1893 contained what was known as the ' in-and-out ' plan, by which Irish repre- sentatives were to vote on Imperial questions, but were to be excluded from taking part in the decision of purely British questions. During the passage of the Bill through the House of Commons this plan was shown to be utterly unworkable. In the form in which it was finally sent up to the House of Lords the Irish members were retained for all purposes. The objection to this solution of the difficulty is obvious. The inhabitants of Great Britain were denied the right that Liberals were advocating for Irishmen — viz. the right to manage their own affairs in their own way. Irish representatives, on the other hand, would have had the power of interfering in matters which only affected Great Britain. This objection was fatal to the Bill from the British point of view, and alone would have justified the House of Lords in rejecting it. The history of the two attempts of the Liberal party to deal with Home Rule justifies the contention, which the present writer has maintained ever since he became a candidate for Parliament, eleven years ago, that it is impossible to devise a satisfactory measure of Home Rule for Ireland alone. The Home Rule FEDERAL GOVERNMENT 59 question must be approached from the broader standpoint of Mr. Redmond's remarkable speech in the House of Commons on June ii. Under a scheme of Federal government, which implies the establishment of local legislatures in England, Scotland, and Wales, as well as in Ireland, the difficulties which have been pointed out in devising a satisfactory measure of Home Rule for Ireland only disappear. These local legis- latures would deal with the special interests of each country, leaving to the existing Parliament (probably with some reduction in the number of members) the management of questions which are of common interest to the whole of the United Kingdom, and all Imperial business, until the time arrives for establishing a true Imperial Parliament, with Colonial representation. This is the policy which I and others have been urging by every means in our power should be adopted by the Liberal party to-day as the main plank in its platform, and as a remedy for one of the chief features in the political situation, the congestion of business in Parliament. We claim no originality for the idea. A resolution in favour of ' Home Rule aU round,' as it is commonly called, was carried in the House of Commons in 1895, on the motion of Mr. Dalziel, seconded by Mr. Augustine Birrell. During the election of 1895 the question was very largely discussed, more especially in Scotland. On all hands the increasing difficulty of carrying on the business of the country in the 60 PROBLEMS OF EMPIRE House of Commons is lamented. During the present session it has only been possible to carry it on at all by the most drastic use of the closure ; and the use of this engine of parliamentary government is becoming an abuse when it is applied to a vote of £17,000,000 of public money, after an evening's discussion. Sir Henry Fowler, speaking at the City Liberal Club a few weeks ago, drew a most gloomy picture of the existing condition of things, and suggested as a remedy an autumn session, to be devoted to the reform of parliamentary procedure. Mr. T. W. Russell takes a no less gloomy view of the case. ' The sooner,' he says, ' that the people of this country are face to face with a real and living issue — i.e. the preservation of parliamentary government — the better it will be for all concerned.' Mr. Russell's remedy is the extension of the principle of Grand Committees ; and the burden of his song, as of that of Sir Henry Fowler, is that at all costs the dig- nity of the House of Commons must be preserved. Either remedy might be of value if the congestion of business could be attributed to the obstruction of the Irish party, the fractiousness of the Opposi- tion, or the multiplication of questions. The real reason lies deeper than this, and was well put by Sir Henry Campbell-Bannerman in his address to the electors of the Stirling Burghs, issued in July 1895. ' The excessive burden of work,' he said, ' now imposed upon Parliament can only be relieved by a large system of devolution. It FEDERAL GOVERNMENT 61 is for this reason, as well as from a sense of right and justice to the nationalities concerned, that I regard as urgently necessary the creation for the three kingdoms of subordinate legislative assem- blies dealing with the distinctive affairs of each.' The House of Commons is the responsible guardian of the interests of the greatest Empire the world has ever seen. It has to deal with questions affecting the United Kingdom as a whole ; and it also legislates for the special interests of the several countries of the United Kingdom. The diversity of business is extraordinary, the quan- tity enormous ; and it is not to be wondered at that the House of Commons is unequal to the task now imposed on it. In no other country of the civilised world is such a task attempted. The conclusion is inevitable, that parliamentary government is breaking down because the needs of the Empire, of the United Kingdom as a whole, and of its several parts, have outgrown the existing means for dealing with them. The remedy lies in the recognition of the distinction between the different classes of business which we either attempt to deal with, often very ineffectually, or do not attempt to deal with at all, in the House of Commons, and of the necessity of allocating what may here be roughly described as Imperial business and domestic business to different legis- lative assemblies. To take another point of view — the waste of time and power under our present system, which 62 PROBLEMS OF EMPIRE compels questions of special regard to one part of the United Kingdom or the other to be dealt with in the over-worked Imperial Parliament. Much of the legislation passed by the House of Commons is of special application to England, Scotland, or Ireland. We have a recent conspicu- ous instance in the passing of one Local Govern- ment Act for England and Wales, another in a different year for Scotland, and another in a different year again for Ireland. The proportion of statutes which have a special application to one country of the United Kingdom or the other is tending to increase. Excluding from consider- ation all statutes which apply to India and the Colonies, but including amongst the special statutes those general statutes which have clauses of special application, the proportion of general statutes may be taken roughly as follows : In 1837-46 at two to one ; in 1861-70 at six to five ; in 1891-1900 at three to five. A more careful examination of the statutes themselves might somewhat alter these figures, but, in any case, the great and increasing waste of time under a system which allows each country of the United Kingdom to meddle in the private affairs of the others is apparent. That Irishmen and Englishmen should be supposed to legislate on the Scotch Crofter question, of which they cannot have the neces- sary special knowledge, is absurd. That such a question, for instance, as the Disestablishment of the Church in England should be decided partly FEDERAL GOVERNMENT 63 by the votes of Irish Roman Catholics, Scotch Presbyterians, or Welsh Dissenters, is totally opposed to the right of self-government on which the Empire has been built up, and which the Liberal party has long advocated with reference to Ireland. What has been said with regard to the special knowledge required for the proper conduct of the business of each country of the United Kingdom applies with even greater force if we take a wider survey. Lord Rosebery, in his rectorial address at Glasgow, lamented the want of men of first-class capacity in various walks of life. But as far as politics are concerned, the field is becoming too vast for the capacity of the ordinary politician. Imperial business and domestic business each require special train- ing, special study, and special aptitudes. The training of the School Board, the County Council, or the Trade Union may be admirable for one who seeks to take part in domestic legislation : but something more is required from the member of a Parliament which deals with the great questions of Imperial and Colonial policy. To those who have travelled much in the Empire, the assurance with which some men speak on the Imperial and Colonial questions, of which they have no special knowledge, is amazing. Nowhere is this more conspicuous than in the treatment of the great question of the moment — the war in South Africa and its conduct. The 64 PROBLEMS OF EMPIRE business of the country will be much better carried on when it is specialised, when Imperial questions are treated in one assembly and domestic business in others by those specially qualified to deal with them. There are many Liberals who think that it should be the first object of the Liberal party to abolish or restrict the veto of the Upper Chamber. From the rejection of the Home Rule Bill in 1893 to the election of 1895 a strenuous attempt was made to get up an agitation against the House of Lords. That attempt signally failed, and it failed because the people of this country believed that the House of Lords was justified in rejecting the Home Rule Bill. The Bill involved an important change in the Con- stitution, and a modification (which has already been alluded to) of vital consequence to the people of Great Britain was introduced during its passage through the House of Commons. The main object of the existence of a Second Chamber is to compel the submission to the opinion of the people of any measure involving a change in the Constitution under which they live. If this be admitted it may be asserted that it was the duty of any Second Chamber, however constituted, to have rejected the Home Rule Bill of 1893. But though a good case can be made out for the House of Lords for its action in this matter, all Liberals are agreed that an Upper House, which is practically composed of the FEDERAL GOVERNMENT 65 members of only one of the political parties in the state, is a bad revising chamber for social and domestic legislation. Under a scheme of Federal government such legislation would, for the most part, be dealt with in the legislatures of the several countries of the United Kingdom, and would be removed altogether from the control of the House of Lords. There is another important argument in favour of the separation of domestic business and Imperial business, on which a few words must be said. Under present conditions, when an appeal is made to the country. Imperial questions and domestic questions are submitted to the electors in a confused issue. Of recent years Imperial questions have held the larger share of the atten- tion of the electorate. At the election of igoo every domestic issue was subordinated to the one Imperial question — the war in South Africa. The result was a crushing defeat of the Liberal party. But from the fact that London, which is represented in the Imperial Parliament by an over- whelming majority of Conservatives, has recently returned a Progressive majority to the London Council, it is not unreasonable to infer that the country would have desired Liberals to manage its domestic business, while it believed that its Imperial and foreign interests were safer in the hands of the Conservatives. At some future election the converse of what happened last year might take place. Some question of domestic 66 PROBLEMS OF EMPIRE policy might be to the front, and the party might be returned to power on that issue which perhaps in the opinion of the electorate was the less qualified to carry on the government of the Empire. Then, again, the impotent condition of the Liberal party to-day is due, in the main, to a division of opinion on Imperial policy. On this rock it may possibly be rent in twain. And yet, as to the necessity for those domestic reforms which have figured in the Liberal programme for so many years. Liberals are agreed, and to secure the passing of those reforms all sections of the Liberal party might work together. Thus from a party, no less than from a national, point of view it is desirable that domestic questions and Imperial questions should no longer be submitted to the electorate in the same confused issue. To turn to objections which may be urged against the policy here advocated. There is no doubt that if Scotland demanded Home Rule, there would be little objection from the average Englishman to meeting her wishes. If there was an effective demand in England for a local legislature to deal with English affairs, the demand would be granted to-morrow. But with Ireland the case is different. The present attitude of the Irish party, their openly avowed hostility to this country, especially as regards the war in South Africa, and the fear that the grant of powers of self-government would only FEDERAL GOVERNMENT 67 lead to disorder, make many Liberals doubtful of the expediency of raising the question of Home Rule. But whether we like it or not, the question must be faced. The Irish party is again a united and vigorous parliamentary force, determined to use every means to compel attention to the Irish demand. No Liberal can contemplate with equanimity the possibility of governing Ireland indefinitely in opposition to the wishes of the majority of the Irish people. In the utter selfishness of our treatment of Ireland in the past — in the fact that while the reign of Queen Victoria and the era of Free Trade have been a period of industrial and commercial prosperity for Great Britain, the population of Ireland, under the same Free-Trade policy which has been so beneficial to us, has diminished by one-half — much excuse may be found for the sympathy which Irishmen have expressed with the enemies of this country, and for the attitude adopted at the time of the Queen's death. If the position of the two countries had been reversed it is certain that the feelings of Englishmen toward Ireland to-day would not be one whit less bitter than those of Irishmen are to us. Owing to the operation of the Land Purchase Acts, the admirable work done by Mr. Horace Plunkett for the organisation of the Irish agri- cultural industry, and the community of interest between all classes of Irishmen brought out by the Financial Relations Commission, Ireland is F 2 68 PROBLEMS OF EMPIRE in a better position to manage her own affairs than she was ten years ago. The Act of 1898 placed the power of local government for the first time in the hands of the people. It was a first step in the direction of self-government. The new local bodies are a valuable training-ground for the men who may later feel called upon to serve their country in a wider field. On the whole, the experiment must be admitted to have worked well. Its success will be a fact which will form one of the most powerful arguments for granting to the Irish people that larger power of self-government which they demand. Thcs agitation for compulsory land purchase is a factor in the situation which cannot be neglected. The agitation has developed a community of interest between bitter political opponents, even greater than that produced by the Financial Relations Commission, and any movement which has this effect is all for the benefit of Ireland. The fear that an Irish parlia- ment would deal unjustly with Irish landlords is without doubt at the bottom of much of the objection to Home Rule, and this objection can only he removed by dealing with the remainder of the Irish landlords by land purchase. The exact cost of such a measure has not yet been determined. Mr. T. W. Russell has placed the cost at ;fi20,ooo,ooo. The payments under the existing Land Purchase Acts have been, as a FEDERAL GOVERNMENT 69 rule, punctually met, and this constitutes a reasonable ground for believing that the principal and interest would be as punctually repaid under a larger scheme. The compulsory principle for which Mr. Russell contends is open to grave objection, but to get rid once for all of the Irish land question, to remove one of the chief objections, if not the main objection, to the grant of self- government to Ireland, and to make of Irishmen loyal and contented citizens of the British Empire, would be worth the addition of £120,000,000 to the National Debt, and would certainly justify the risk of advancing such a sum under a land purchase scheme. Another objection that may be urged against the revival of Home Rule at the present time is that neither in Scotland, Wales, nor England does opinion stand where it did six years ago. The election of last year was fought on other issues. With some exceptions the question did not figure prominently in election addresses. Many candi- dates ignored it altogether. Hence the assertion in some quarters that Home Rule is dead. While it is most unlikely that Mr. Gladstone's proposals for dealing with Ireland alone will ever be revived, the Duke of Devonshire and Mr. Chamberlain made it very clear to the Nonconformist Unionist Association that in their opinion Home Rule was not dead, but dormant. Of Scotland and Wales this is probably true. As regards England the case is different. The seat of government is 70 PROBLEMS OF EMPIRE in London. In the House of Commons, England has such a preponderating voice that the necessity for a separate legislature to deal with his business does not come home to an Englishman with the same force as to a Scotchman, an Irishman, or a Welshman. Though there is already a con- siderable body of opinion in favour of devolution of business from the House of Commons in some shape or other, it is undoubtedly in England that most educational work must be done before there can be a prospect of carrying a measure of Federal government for the United Kingdom. The ' pre- dominant partner ' must be induced to contem- plate devolution as applied to himself, and to realise that if he wishes proper attention given to the housing question, the problem of the aged poor, temperance, the condition of British industry, the depopulation of the agricultural districts, he must have a parliament free to devote its whole time to English business. That this is not a difficult task is the experience of those who have addressed meetings in all parts of the country during the past six months on the necessity of devolution. We have been hitherto considering the policy of Federal government with special reference to the United Kingdom ; but a survey of the subject would be incomplete unless it was also considered in its relation to the constitutional structure of the Empire. Nearly twenty years ago the Imperial Federation League was formed, under FEDERAL GOVERNMENT 71 the presidency of the late Mr. W. E. Forster, with the object of bringing home to the public mind the fact that the constitutional arrangements under which the Empire was then governed, and is still governed, could not be permanent if the Empire was to remain united. It urged that the resources of the whole Empire ought to be combined for the common defence, and that all those parts which bear their share of Imperial burdens must have a voice in the control of Imperial expenditure and Imperial policy. At the time when the Imperial Federation League was formed this idea of a common citizenship and of common responsi- bilities was but imperfectly realised, either in the Mother Country or in the Colonies ; and though the League never took up Lord Salisbury's challenge, and was wise enough to abstain from formulating any scheme of Federal government, yet the work which it carried on after Mr. Forster's death under the presidency of Lord Rosebery, and, on his taking office in 1892, under the presidency of the late Mr. Edward Stanhope, had the effect of dispelling the doctrine of the Manchester School, that the Colonies were a burden to the Mother Country, and would cut themselves adrift as soon as they were able to stand by themselves. Statesmen, such as the Duke of Devonshire and Mr. Chamberlain, who took no part in the pioneer work of the Federation League, have been recently amongst the foremost champions of the idea of Imperial unity, which, 72 PROBLEMS OF EMPIRE thanks to the Jubilee celebrations, the centralising influence of the Monarchy, and, above all, to the spontaneous assistance rendered by the Colonies in the South African war, has indelibly impressed itself in the minds of the people of this country. In the Colonies the growth of the sentiment of Imperial unity has been no less remarkable. Fourteen years ago, when I first visited Australia, there was great irritation in all the Australasian colonies, but more especially in Queensland, at the treatment by the Home Government of the New Guinea question, the New Hebrides question, and the transportation of French convicts to New Caledonia. There was undoubtedly a large body of Australians at that time, especially amongst the younger men, who looked forward to the creation of an Australian nation independent of the Mother Country. Nine years later that feeling had passed away, and opinion was practi- cally unanimous that the true line of Australian national development was consistent with her remaining an integral portion of the British Empire. But even in 1896 there was some grumbling at the small contribution made to the cost of the Australian squadron, and no one could then have ventured to predict the sacrifices that would be made in men and money within four years' time to assist the Mother Country in her time of stress and trouble, not only in South Africa, but in China. In Canada, in the period between the death FEDERAL GOVERNMENT 73 of Sir John Macdonald and the defeat of the Conservative party in the election of 1896, there was a considerable, and perhaps a growing, body of opinion that looked to annexation to the United States as the future destiny of Canada, and as offering the best hope for her industrial development and the prosperity of her people. During that election the Conservatives en- deavoured to represent that annexation would be the consequence of the victory of the Liberal party. But Sir Wilfrid Laurier was able to make his position perfectly clear, and the result was a great victory for the Liberals. It is impossible to deny that during Sir Wilfrid Laurier's premiership the relations between Canada and the Mother Country have become closer. As in Australia, so in Canada, public opinion is to-day unanimous that the highest aspirations of the Canadian people can be realised within, and not without, the British Empire. In South Africa the tendency of opinion was until recently in the same direction. Mr. Hofmeyr, the head of the Afrikander Bond, was a leading figure at the first Colonial Conference of 1887, and it was he who brought forward the proposal that the whole Empire should contribute to the maintenance of the Navy by imposing a differential duty of 5 per cent, against non-Imperial goods. At the second Colonial Con- ference held at Ottawa in 1893, Mr. Hofmeyr again attended as one of the representatives of 74 PROBLEMS OF EMPIRE the Cape Colony, and it is unlikely that he would have done so unless he had represented the feeling of the majority of the Dutch inhabitants, not only of Cape Colony, but of South Africa. But the clouds were looming on the horizon which have burst in the present war. The ideal of a Dutch South African Republic, the realisation of which was only possible through our mistakes, has been destroyed by force, and it remains to be seen whether the Dutch will become reconciled to the liberty which every colonist enjoys under the British flag. In the present state of South Africa it is difficult to gauge the trend of public opinion. The most prevalent feeling amongst British and Dutch alike is probably one of dependence on the Imperial government ; and the best hope for the future lies in the establish- ment of a Federal government in South Africa on similar lines to those of the Dominion govern- ment of Canada and the Commonwealth govern- ment of Australia. But for the Jameson raid it is not improbable that the federation of South Africa would have already been an accomplished fact. Except in South Africa the sentiment of Imperial unity has been growing.^ The assistance given from Canada, Australia, and New Zealand in this war is the proof, if any is needed, that all parts of the Empire have come to realise the duties and the responsibilities of their common citizenship. This assistance has been given in ' This exception need no longer be made. FEDERAL GOVERNMENT 75 spite of the fact that no Federal government, no Federal organisation for the purposes of defence, was yet in existence. But the time must come ere long when it will be necessary to organise the resources of the whole Empire for the common defence, and to establish a Federal government. Until the present war the burden of defending the Empire has fallen almost wholly on the shoulders of the Mother Country. While the Colonies were in their infancy it was only natural that this should be so ; but the Colonies are now growing from youth to manhood. Their popula- tion and resources are year by year increasing relatively to those of the Mother Country. The population of Canada exceeds that of Scotland, the population of Australia is roughly equal to that of Ireland ; while the white population of South Africa will ere long not be incompar- able to that of Wales. This means that, in a properly constituted Imperial Parliament, Canada, Australia, and South Africa would carry as much weight as Scotland, Ireland, or Wales, and the control which they would be able to exercise on Imperial policy would not be inconsiderable. This control we must give them when they are prepared to bear their share of the maintenance of the naval and military forces of the Empire. The growth of the ordinary expenditure on the Navy and Army has been very heavy. We have been passing through a period of great commercial prosperity, so that until the imposition of the 76 PROBLEMS OF EMPIRE extra taxation necessitated by the war the burden has been little felt. But it is unreason- able to expect that this prosperity will continue, and when the depression comes we in the Mother Country shall begin to realise that the cost of defending the Empire is becoming too heavy for the people of these islands alone. We shall have to appeal to our Colonies to help us to main- tain that command of the sea which is being seriously threatened by the shipbuilding activity in Germany, Russia, and the United States, and which is absolutely vital to our national existence. But we cannot expect the help of our Colonies without giving something in return. Sir Wilfrid Laurier, in the Dominion House of Commons on March 14, 1900, said, ' If our future military contribution were to be considered compulsory — a condition which does not exist — I would say to Great Britain, " If you want us to help, you must call us to your Councils." ' This demand can only be met by the establishment of an Imperial Parliament in which every part of the Empire which bears its fair share of Imperial burdens will be represerjted. But though events are tending rapidly in this direction, neither in the Mother Country nor in the Colonies are we ripe for so great a constitutional change at this moment, and any attempt to rush the Colonies, and to take undue advantage of the feeling evoked by the danger to our Empire in South Africa, would FEDERAL GOVERNMENT 77 be a grave blunder. Mr. Seddon's proposal to form an Imperial Reserve in Australasia, the fact that, as the Times' Toronto correspondent tells us, the British Budget is looked upon by- Canadians not so much as a warning as a sug- gestion of duty, are indications of Colonial opinion which will bear fruit in due course. We in the Mother Country have hardly begun to appreciate the broad distinction between Im- perial business and domestic business, and still less to contemplate the possibility of classifying into three divisions the business which we have been always accustomed to see dealt with in the House of Commons. To the Colonial mind, or to the mind of one who has travelled much in the Colonies, such distinctions are easy. Every Canadian has lived for thirty years past (as every Australian will live henceforward) under three parliaments — the Provincial Parliament, the Dominion Parliament, and the Imperial Parlia- ment, in the last of which at present he is not represented. When we have seen that it is possible to distinguish clearly the class of business to be handed over to a Scotch, Irish, Welsh, or English legislature by the existing Parliament, and not till then shall we be able to grasp what is meant by Imperial Federation. Note. — From the subjoined diagram the steps necessary to complete the constitutional structure of the Empire will be more clearly understood. 78 PROBLEMS OF EMPIRE IMPERIAL PARLIAMENT United Kingdom Parlia- ment T\ Dominion Parliament of Canada Common- Federal wealth Parliament Parliament, of South Australia A pica . I i I I ■ >> a o I— ( . o o u > e 8 S g o _ o .2 en "3 S'^ g^^^ ,j3 ai .4) .2 3 -a rf CO 9 CO a . o o Ph So Note i. — The United Kingdom Parliament is at present the Imperial Parliament, and as suggested in this article, and in the resolution which has been carried by a considerable number of Liberal Associations, wUl remain the Imperial Parliament till the Colonies are ready to bear their share of common burdens. Note 2. — The establishment of local legislatures in the several countries of the United Kingdom, and of a Federal Government in South Africa, are, I beheve, necessary precedents to the establishment of a true Imperial Parliament. Note 3. — India and the Crown Colonies would be represented in the Imperial ParUament by nominated representatives. Note 4. — ^Whether Wales has a separate legislature or is treated as part of England is a question of detail, the settlement of which should depend on the wishes of the Welsh people. STEPS TO IMPERIAL FEDERATION (A paper read before the Royal Colonial Institute, November ii, 1902) ' Before calling upon Mr. Brassey,' the chairman, Sir Frederick Crichton Young, said, ' I should like to quote from the utterances of two of our most prominent Cabinet Ministers on the subject of Imperial Federation. In his striking and masterful address in opening the Colonial Con- ference in the month of June last, Mr. Chamberlain used these remarkable words : "I may be con- sidered perhaps to be a dreamer, or too enthusiastic, but I do not hesitate to say that in my opinion the political federation of the Empire is within the limits of possibility." Still more striking, if possible, are the remarks of the Prime Minister in his speech last night at the Guildhall, in the course of which he said: "After all, I suppose most of us cherish, I will not say the dream — most of us cherish the hope that, if not in our time yet at no distant date, there will be not merely the legal and sentimental ties Joining us to our great dependencies, but that something in the nature of a constitutional union may 80 PROBLEMS OF EMPIRE be discovered which will enable us to conduct together affairs of common interest." ' Mr. Brassey then read the following paper : — In the last paper of last session, Mr. Archibald Colquhoun dealt with Imperial Federation in its relation to defence, to trade, and to repre- sentation. This paper will be devoted mainly to Federation in its political or constitutional aspect. Questions of party politics are excluded, and rightly excluded, from the purview of the Royal Colonial Institute. But Imperial Feder- ation — the problem of Imperial unity — is not a party question. It represents an ideal which appeals to men of all political parties and to men who belong to none. It is a question which is high above the level of ordinary party politics, and which can only be treated as it ought to be treated in a gathering such as this, far removed from party strife. It is over thirty years since our chairman of to-night first advocated Imperial Federation. At the time, and indeed for several years later, the ideas of the Manchester School were still prevalent. The Manchester School held that the Colonies were a burden to the Mother Country, and that the sooner they cut themselves adrift and became independent the better • for the Mother Country and the better for themselves. The Colonial Institute was founded in 1868 to combat these views. The Imperial Federation League, formed in 1884, on the initiative of the STEPS TO IMPERIAL FEDERATION 81 late Mr. W. E. Forster, carried the work begun by the Colonial Institute a step farther. The objects and views of the League were thus defined : 1. To secure by Federation the permanent unity of the Empire. 2. That no scheme of Federation should inter- fere with the existing rights of local parliaments as regards local affairs. 3. That any scheme of Federation should combine on an equitable basis the resources of the Empire for the maintenance of common interests, and adequately provide for an organised defence of common rights. Lord Rosebery was the second President of the League, and to him and to Mr. G. R. Parkin is mainly due the growth of the idea of Imperial Unity during the eighties and early nineties. * Imperial Federation,' Lord Rosebery once said, ' is a cause for which any man might be content to live ; it is a cause for which, if needs be, anyone might be content to die,' Those words profoundly influenced my life. Of the tangible results of the League's work the most important was the Colonial Conference of 1887, which it was instrumental in bringing about through a deputation to the Prime Minister. The League was challenged over and over again to produce a scheme for carr57ing out the objects it had in view ; but this was felt to be outside its functions. Its work was in the main 82 PROBLEMS OF EMPIRE educational, and by the results it amply justified its existence. It produced a complete change in public opinion as to the future relations of the various communities of which the Empire is composed, not only in the Mother Country, but in the Colonies. The tone of the public press was revolutionised. A profound effect was pro- duced on the attitude of public men. Statesmen, such as the Duke of Devonshire, Mr. Chamberlain, Mr. Asquith, and Sir Edward Grey, had no part in the work of the Imperial Federation League. To-day they are the most prominent advocates of Imperial Unity. Of the change of public opinion in the Colonies I can speak from personal experience. When I first visited Australia, fifteen years ago (in 1887), it was an open question whether Australia would remain an integral part of the British Empire or not. It is true that, thanks mainly to the large-hearted patriotism of Mr. Dalley, an Australian contingent had been dispatched to the Sudan ; but the feeling of loyalty to the Empire, of which the contingent was the evidence, was severely shaken by the way in which the Home Government had treated ques- tions of paramount interest to Australia — the New Guinea question, the New Hebrides question, and the transportation of French convicts to New Caledonia. Many in this room will remember that the annexation of the south-east part of New Guinea by the Queensland Government STEPS TO IMPERIAL FEDERATION 83 was disallowed by the authorities at home ; that the Germans then annexed the north-east portion of the territory which Queensland had claimed, and that thereupon the Colonial Office, stultifying its own previous action, annexed the remainder. It is not remarkable that at the time of which I speak there was great dissatisfaction with the method in which Australian interests were handled by the Imperial Government. Young Australians were undoubtedly then looking to Australia becoming an independent empire in the Southern Seas. In 1896 I was in Australia again, on a visit to my father, then Governor of the Colony of Victoria. Young Australia, as represented by the Australian Natives Association, which in 1887 had been for separation, was in i8g6 devotedly loyal. The idea that Australia was to become an independent empire had given place to the universal conviction that Australia could better secure the well-being of her people, and could better work out her destinies under the British flag. But even in 1896, there was considerable grumbling at the small contribution made by the Australian colonies to the maintenance of the Australian squadron, and the man would have been rash indeed who ventured to predict that within three short years Australia would put forth the exertions she has made to assist the Mother Country in her time of stress and trial. To trace in similar detail the growth of the 84 PROBLEMS OF EMPIRE feeling of loyalty to the Imperial connection in the other colonies would take too long. Canadians and New Zealanders, as well as Australians and Afrikanders, played their part in the struggle for British ideas of liberty in South Africa. In the square in Pretoria, when it was occupied by Lord Roberts' army, there stood a pediment designed to receive a statue of Mr. Kruger. Some favoured the idea that on it should be erected a statue of our beloved Queen Victoria. Others, and they were in the majority, advocated that the statue of Mr. Kruger should be erected as originally intended by its donor, and that the pediment should bear the inscription, ' To the Federator of the British Empire.' The South African war has not federated the British Empire, but it does represent the realisation of the idea of Imperial unity, and it has convinced the British peoples, as nothing else could have done, that on Imperial Federation in some shape or other depends the future well-being, nay, even the very existence, of the Empire. Before dealing with Federation in its con- stitutional aspect, a few words must be said from the points of view of trade and of defence. Commercial Federation, on the basis of Free Trade within the Empire, is at present out of the question, because the greater part of the revenue of the Colonies is raised from Customs duties, and it would be impossible for them to make good a large deficiency of revenue under STEPS TO IMPERIAL FEDERATION 85 this head from other sources. It has been recognised as impracticable by the recent Colonial Conference. Commercial Federation, on the basis of preferential trade within the Empire, stands on a different footing. Canada already gives to the Mother Country a preference of 33^ per cent, over those countries which are protectionist. Other colonies are prepared to follow Canada's example. Is it to the advantage of the people of the Mother Country to give to the Colonies in return a preference in the home market ? The Free Trade position cannot be defended by arguments applicable to the conditions of fifty years ago. The conditions of the problem have changed, mainly through the enormous decrease in the cost of transport. It must be defended in the light of recent experience and present-day facts. Canada alone is said to be capable of producing all the wheat required to feed the people of the United Kingdom. Australasia sent us in 1901 more wheat than Canada, and as Sir Edmund Barton said in his speech to the Tunbridge Wells Farmers Club, it is also a first-rate butcher's shop. Preferential duties, which would ensure the Empire becoming self-supporting as regards its food supply, have many attractions, not the least of which is that they would have a tendency to check the decline in the agricultural population of Great Britain and Ireland. 86 PROBLEMS OF EMPIRE It must be borne in mind that a commercial federation which did not impose a tax on Russian and American wheat for the benefit of the Canadian wheat-grower, and a duty on other agricultural produce for the benefit of the Australian and New Zealander, would be of little value to the Colonies. Taxes on food supplies and raw materials are open to the gravest objection. The Colonial Conference has gone as far as it is possible to go at the present stage in the direction of Commercial Federation. The most extreme Free Trader can have no objection to the Colonies reducing their tariffs on imports from the Mother Country when they exact no pledge in return. To turn to Defence. In the history of the Imperial Federation movement, nothing is more remarkable than the continuity of the idea that the most practicable step in the direction of Federation lies in a combination for defence. To deal with the question of Federation from this point of view would require a paper in itself. I have always held that the Colonies, in their present stage of development, cannot give substantial monetary assistance towards the general defence of the Empire, or, in other words, that no contribution which they can at present afford would substantially lessen the burden which the Navy and Army Estimates impose on the British taxpayer. At the recent Colonial Conference the STEPS TO IMPERIAL FEDERATION 87 following annual contributions to naval defence were suggested : Australia . jf200,000 New Zealand 40,000 Cape Colony . 50,000 Natal 35,000 Newfoundland 3,000 £328,000 Even assuming that Canada agreed to con- tribute in the same proportion as Australia, the total contributions of the Colonies to the naval defence of the Empire would scarcely exceed £500,000. Such a sum does not loom very large in estimates which amount to over £30,000,000. On the other hand, the Colonies might assist us, and assist us very materially, with men. For example, in spite of large increases to the permanent force, the personnel of the Navy, including reserves, is quite insufficient for our country's requirements ; and there are many indications that a further increase in the fleet will be necessary. In 1896, when visiting Canada and Australia, I made an especial study of the possibility of drawing on the Colonies for the Naval Reserve. In the fishing and seafaring population of Canada and Newfoundland and in the merchant seamen of Australia there was clearly an abundance of good material. In 1897 and in the following years I advocated by every 88 PROBLEMS OF EMPIRE means in my power that this material should be utilised. Two years ago a small experiment was made in this direction in Newfoundland. The result appears to have been satisfactory, and it is gratifying to know that at the Colonial Con- ference it has been definitely decided to establish branches of the Naval Reserve in Australasia, as weU as in Newfoundland. It is, however, not only in this direction that the Colonies can assist in the matter of naval defence. Melbourne and Sydney have been made two of the most strongly defended ports of the Empire, and Albany and Thursday Island have been protected from the raider, mainly at Colonial expense. The forts that defend them are manned by Colonial troops. Is it too much to ask Canada to follow the example of Australia, and make herself responsible for manning the defences of Halifax and Esquimault ? ^ Bases such as these — and with them must be included Durban and the Cape — which are rendered secure not so much by their forts and guns as by the fact that they have a large population behind them ready to resist the invader, are a valuable element of sea power, and a Colonial contribution to the defence of the Empire which must not be lost sight of. On the Navy we depend for the defence of our shores from invasion, for the protection of our commerce, and for the security of our trade » Carried into effect 1905. STEPS TO IMPERIAL FEDERATION 89 routes. The part which the British Army can play in war with any first-class power except Russia and the United States is only a secondary one, but is stiU important. It is our chief weapon of offence. With the assistance of the Navy, it must lend its energies to the capture of the colonies and coaling stations of the enemy, more indispensable now than before the introduction of steam to the success of their depredations on our commerce. For a war such as that which we have recently waged in South Africa, the Colonies have shown that they can provide material of unequalled quality. Mounted infantry are probably destined to play an important role in other fields. Would it not be possible to raise regiments of mounted infantry in Canada, in Australia, and in South Africa, one of the battalions of which would form the depot in its own colony whilst the other was serving in India or some other part of the Empire ? Nothing could have a greater effect on the widening of the Colonial conception of Imperial responsibility in matters of defence than the fact that there were Canadians, Australians, and South Africans serving in peace time, as they have done so nobly in time of war, side by side with Englishmen, Irishmen, and Scotchmen in all corners of the world. Such a step as that suggested may be in advance of Colonial opinion at the present time, but the Colonies can certainly, by keeping the military forces^which are now, and must 90 PROBLEMS OF EMPIRE remain, under their own control — efficient and properly equipped, render great assistance in the direction already indicated. To turn to the constitutional aspects of Imperial Federation. ' If I am asked,' said Mr. W. E. Forster, in 1885, ' " How can the Mother Country be kept united with her Colonies ? " I reply, "By an organisation for common defence and a joint foreign policy." And again, to the question, " Why not leave matters alone ? " I reply, " Self-government will end in separation if there be no such organisation." ' Exaggerated hopes were entertained in certain quarters as to the possibilities of the Conference of Colonial Premiers during the past summer. Such hopes were fore- doomed to disappointment. As pointed out over and over again by Sir Edmund Barton during his stay in this country, ' It is only possible to advance so far as public opinion coincided in various parts of the Empire, and so far as it was compatible with self-government. If more was attempted the Empire would suffer loss.' The decisions of the Coronation Colonial Conference are a most important advance in the direction indicated by Mr. Forster. It decided — subject, of course, to ratification by the various parliaments concerned — (i) that the Colonies should take upon themselves a larger share of the burden of naval defence ; and (2) that periodical conferences of Premiers should be held, at intervals of not STEPS TO IMPERIAL FEDERATION 91 more than four years, to discuss questions of common interest. The Conference admitted the principle of Imperial Federation. These decisions are of great import for the future ; but they only represent the first and tentative stage in the desired direction. Ever since I had the privilege of visiting our great colonies and dependencies, I have been convinced that the permanent unity of the Empire rests on two great principles of Imperial government : (i) The right of each part of the Empire which bears its fair share of Imperial burdens to a voice in the control of Imperial expenditure and the direction of Imperial policy. (2) The right of each part of the Empire to manage its own local affairs in its own way. The time will come ere long when these principles must be applied to the government of the Empire, for the simple reason that the burden of defence is becoming too heavy for the Mother Country to bear without the help of her children beyond the seas. In 1892-3 the cost to the British taxpayer of Imperial defence amounted to some ;f35, 000,000. In 1902-3 our naval and military expenditure, quite apart from the special expenditure on the wars in South Africa and China, had risen to over ;^6o,ooo,ooo. All our expenditure for pur- poses of defence does not appear in the Annual Estimates. Under the Naval Works Act of 1902 no less than £27,000,000 is to be expended on 92 PROBLEMS OF EMPIRE the construction of docks and naval barracks, and the protection of naval ports at Gibraltar, Devonport, Dover, Hong Kong, Simon's Bay, and Bermuda. Expenditure on defence is more likely to increase than to diminish. Owing to the large additions being made by Germany, Russia, aiid the United States to their navies, increased exertion on our part will be necessary if we are to retain the command of the sea. We have been passing through a period of great commerical prosperity, so that, until the imposition of the extra taxation necessitated by the war in South Africa, the increase in our national expenditure has been little felt. Prosperity cannot continue for ever. Trade moves in ever-recurring cycles of prosperity and depression, and when the de- pression comes, as it must come ere long, we in the Mother Country shall begin to feel that the burden of defending the Empire is becoming too heavy for the taxpayers of these islands alone. When colonies are in their infancy it is the duty of the Mother Country to charge herself with their defence, but our Colonies are now rapidly growing from youth to manhood. Their popula- tion and their resources are year by year increasing relatively to those of the Mother Country (a temporary exception must be made in the case of Australia, which has been suffering from a drought of unprecedented severity and duration). It is not, I think, unreasonable to expect that before many years have passed the Colonial STEPS TO IMPERIAL FEDERATION 93 taxpayer will be both able and willing to stand shoulder to shoulder with the taxpayer of the Mother Country. The conditions on which that help will be given were tersely put by Sir Wilfrid Laurier in the Dominion House of Commons on March 14, 1900 : ' If our future military contri- bution were ever to be considered compulsory — a condition which does not exist — I would say to Great Britain : "If you want us to help, you must caU us to your Councils." ' This demand can only be met by giving to every part of our Empire which bears its fair share of Imperial burdens a constitutional voice in the control of Imperial policy. How is this to be done ? It has been suggested that Colonial representatives might be added to the Privy Council,to the House of Lords, or to the House of Commons. None of these suggestions offers a satisfactory solution of the difficulty. The Privy Council and the House of Lords do not control national expenditure. The House of Lords would hardly be a congenial atmosphere for the representative of a democratic community. The House of Commons does not deal solely with Imperial questions. What is to be the position of the Colonial representative in the House of Commons when, for instance, an English Education Bill is under discussion ? It is, I believe, impossible, under our pre- sent constitutional arrangements, to provide for Colonial representatives taking part in the direct 94 PROBLEMS OF EMPIRE control of Imperial policy. Imperial Federation, therefore, implies a modification of the constitu- tion for which public opinion is certainly not yet prepared, either in the Colonies or the Mother Country. Australia has just established her Common- wealth constitution. It is impossible to suppose that Australian statesmen will be prepared to make another great constitutional experiment until they have satisfactorily overcome the difficulties inseparable from the working of new constitutions, with which the Federal Parliament is confronted. In South Africa the efforts of statesmen and people must for some time be devoted to repairing the damages wrought by the long struggle now happily brought to a conclusion. Responsible government must be built up, not only in the Transvaal and Orange River Colony, but in Rhodesia ; and the Federal government for South Africa, to which many South African statesmen were looking long before the recent troubles, must be established before South Africans wiU be in a position to discuss any proposal for Imperial Federation. "While every Canadian for the past thirty-five years, and every Australian for the last two years, has lived under three parliaments, each dealing with a distinct class of business, we, in the Mother Country, have been accustomed to the whole of our business, Imperial and domestic, being transacted in the Parliament which sits at Westminster. Our Empire has STEPS TO IMPERIAL FEDERATION 95 grown up and expanded under the aegis of that parHament. The government of Scotland, and the government of Ireland, have been centralised in its hands. The population of the country has multiplied, and with the growth of population have come increasing demands for legislative and administrative action. Not until the British people recognise the impossibility of transacting the business of the Empire and of these islands with less machinery than 300 years ago, not until they appreciate that a distinction can be drawn between Imperial and domestic questions, will they be able to understand what is meant by Imperial Federation. While Australians are getting their Common- wealth constitution into working order, while Afrikanders are laying the foundations of Federal government for South Africa, we, in the Mother Country, have our part to play in the evolution of a more perfect system of Imperial government. The establishment of Federal government in the United Kingdom is an essential preliminary to Imperial Federation. Such a proposal involves a great change in our constitution, and it must be justified by very strong arguments. First and foremost of these is the fact that power is rapidly passing from Parliament to the Cabinet, and to the great departments of State, owing to the overwhelming pressure of business in the House of Commons, This pressure arises partly from the growing 96 PROBLEMS OF EMPIRE prominence of Imperial questions which, though not receiving adequate attention themselves, have absorbed the energies of Parliament and the Government to such an extent as to throw questions of domestic and social reform into the background ; partly from the competitive claims of England, Wales, Scotland, and Ireland, to secure a portion of the time of Parliament for the con- sideration of their special interests. Let me give two illustrations of the way in which our Imperial business is at present conducted : 1. The Imperial Parliament is responsible for the government in India of three hundred millions of people, nearly a fifth of the human race. That is an enormous responsibility. And what is the amount of time devoted by Parliament to the consideration of Indian questions ? At most one or two days at the fag end of a session. 2. The control of national expenditure is amongst the most important, if not the most important, of the functions of the representatives of the people in Parliament. I have already alluded to the recent growth in annual expenditure. The growth in expenditure has not been confined to the department of the Navy, It has affected every department to a greater or lesser extent. During the past seven years the annual ordinary expenditure of the country has increased by no less a sum than 1^35,000,000 sterling. Some of this increased expenditure could, I believe, have STEPS TO IMPERIAL FEDERATION 97 been avoided had Parliament exercised its powers of control. But control cannot be effectively exercised when £67,000,000 of public money are voted in three hours, or at the rate of some ;£22,ooo,ooo an hour, practically without dis- cussion. This was actually done on August g of last year. No stronger instance could be given than this of the impossibility of carrying on the business of the Empire under present conditions. As regards domestic business, it is impossible to deny that the absorption of the time of Parlia- ment on Imperial matters has tended to throw into the background such questions as education, housing, temperance, the relations between capital and labour, the problem of the aged poor, the decline of our agricultural population, the decline of the number of British seamen in British ships — questions which affect the people of this country in their homes. This constitutes the solid basis of such anti-Imperialist feeling as exists in the country. The Little Englander attributes to what is vaguely called Imperialism what is really due to the congestion of business in Parliament. It is a feeling which is too widely held to be ignored by us who are Imperialists — and every member of the Colonial Institute is an Imperialist — and it is our business to remove the basis on which it rests, and to reconcile the spirit of democracy with the ideal of ' United Empire.' There are two other evils incidental to our 98 PROBLEMS OF EMPIRE present system of Imperial government, to which allusion must be made : 1. Imperial business and domestic business each require special training, special study, and special aptitudes. The training of the School Board, the County Council, or the Trade Union may be admirable for one who seeks to take part in domestic legislation ; but something more is required from the member of a parliament which deals with the great questions of Imperial and Colonial policy. To those who have travelled much in the Empire, the assurance with which some men speak on Imperial and Colonial ques- tions, of which they have no special knowledge, is amazing. Nowhere has this been more con- spicuous than in the treatment of the war in South Africa and its conduct. 2. Under present conditions, when an appeal is made to the country, Imperial questions and domestic questions are submitted to the electors in a confused issue.^ At the election of igoo every domestic issue was subordinated to the one Imperial question — the war in South Africa, At some future election the converse of what happened in igoo might take place. Some question of domestic policy might be to the front, and the party might be returned to power on that issue, which perhaps, in the opinion of the electorate, was the less qualified to carry on the 1 This is a repetition of the argument used in the previous chapter. STEPS TO IMPERIAL FEDERATION 99 government of the Empire. That is a danger to which Mr. Chamberlain alluded in a recent speech at Birmingham ; and it is in my belief a very real danger to the Empire. Let me illustrate what I mean. The Boers went to war trusting in two things : (i) foreign intervention ; (2) the possibility of a change of government and a reversal of policy, such as took place in 1880. Had an Imperial parliament been in existence in 1899, the people of this country would have had accurate information from the representatives of Natal or of the Cape Colony as to the situation in South Africa, and there would have been none of that ignorance and misunderstanding which have been so fruitful a cause of evil in our relations with South Africa. It is my firm conviction that, had the Boers known that they had to deal with a united empire, and that there was no chance of a reversal of Imperial policy, the South African war would never have taken place. Such then are the evils of our present system of government, and these are .the reasons which are convincing men of all political parties that parliamentary government has broken down. Parliamentary government has broken down because we are attempting to deal in one single assembly with three distinct classes of business : (i) the business of the greatest Empire the world has ever seen ; (2) questions affecting the United Kingdom as a whole, such as those which in 100 PROBLEMS OF EMPIRE Canada are dealt with by the Dominion Parlia- ment and in Australia by the Commonwealth Parliament ; (3) the special needs of England, Wales, Ireland, and Scotland, which in Canada would be dealt with by the Provincial parhaments of Ontario, Quebec, &c. ; in Australia by the Colonial parliaments of New South Wales, Victoria, &c. No other country has ever attempted to carry on its business with such inadequate machinery. It is not attempted in Germany, in the United States, or in Switzerland. Two alternative remedies are suggested by the experience of other countries. An Imperial parliament, representative of the whole Empire, might be established, the existing Parliament confining itself to questions which affect the United Kingdom as a whole, and to the special interests of England, Wales, Scotland, and Ireland. This remedy involves the degradation of our ancient and historic Parliament to an entirely subordinate position, and, for the reasons already given, it is a policy for the adoption of which neither the Colonies nor the Mother Country are yet prepared. The alternative is for Parliament to hand over to subordinate legislative authorities what may be termed domestic questions, while re- taining in its own hands all Imperial business, as well as all matters of common interest to the whole of the United Kingdom. It implies the creation of legislatures in England, Ireland, and STEPS TO IMPERIAL FEDERATION 101 Scotlaxid (probably also in Wales), each having power to deal with its own internal affairs. The establishment of a federal form of govern- ment in the United Kingdom somewhat similar to that of Canada has, I believe, become urgently necessary. I advocate it, not only for the sake of Ireland or Scotland, but, to use Mr. Redmond's words, for the sake of England, for the sake of the English Parliament, and for the sake of the British Empire. Not the least of the advantages of the establishment of Federal government in the United Kingdom is that it affords a solution of the constitutional difficulties in granting self- government to Ireland alone. I certainly do not propose to discuss that thorny Irish question, which is a perennial source of weakness to the Empire, and which can only be satisfactorily settled with the assistance of all political par- ties in the State ; but it is necessary for the proper understanding of our subject to refer to the constitutional objections to Mr. Gladstone's Home Rule proposals.'^ The Home Rule Bill of 1886 excluded Irish representation altogether from the Imperial Parliament. In other words, Ireland was to be taxed for Imperial pur- poses, without having any voice in the control of the expenditure. If it had become law it would have violated one of the fundamental principles of the British constitution — ' there shall ' These have already been given in a previous article. 102 PROBLEMS OF EMPIRE be no taxation without representation.' In the second Home Rule Bill the ' in-and-out ' plan was proposed ; but during the passage of the Bill through the House of Commons this method was shown to be so impracticable that it was decided to allow Irish members to sit in the Imperial Parliament for all purposes. The ob- jections to this course were fatal from the English point of view, because it would have permitted Irishmen, while free to settle their own local affairs in their own way, to interfere in purely British questions. The modern Home Rule movement, which dates from 1870, and which is associated with the name of Mr. Butt, was directed to securing for an Irish Parliament, * under a federal arrange- ment, the right of legislating for and regulating all matters relating to the internal affairs of Ireland.' Mr. Chamberlain, in the debate on the first reading of the Home Rule Bill of 1886, used the following remarkable words : * I shall look for the solution in the direction of the prin- ciple of federation. ... It appears to me that the advantage of a system of federation is that Ireland might, under it, really remain an integral part of the Empire. The action of such a scheme is centripetal and not centrifugal, and it is in the direction of federation that the democratic movement has been most advanced in the present century.' On the second reading of the Bill Mr. Chamberlain suggested, as an alternative STEPS TO IMPERIAL FEDERATION 103 Home Rule policy, ' the -present constitution of Canada, not in the relations between Canada and this country ' (to which Mr. Gladstone and others had referred) — ' those are the wrong lines, and lines against which I protest, and which lead to separation — but in the relations inter se of the provinces of Canada and the Dominion Parlia- ment. Those are the relations which I, for one, am perfectly prepared to establish to-morrow between this country and Ireland.' History has proved that Mr. Chamberlain was right when, in 1886, he pointed to Federation as the true solution of the Irish question. To sum up. The Coronation Colonial Con- ference has taken us as far as it is possible to go at the moment in the direction of Imperial Federa- tion. All honour to the statesmen whose labours have carried us so far. The burden of the Empire is becoming too heavy for the Mother Country to bear alone. I admit that the Colonies are not yet in a position to tax themselves to the same extent as we are able to do for the common defence ; and until they are in this position the question of providing for direct control by Colonial representatives of Imperial policy does not arise. An Imperial parliament, in which every part of the Empire will be represented, either by elected or nominated representatives, is the ulti- mate goal which we must ever keep before us. Whether it is possible to devise a satisfactory method of dealing with the business of the 104 PROBLEMS OF EMPIRE United Kingdom and the Empire in the same legislature, or whether the business of the United Kingdom should be carried on in a parliament corresponding to the Commonwealth Parliament of Australia and the Dominion Par- liament of Canada, and Imperial business in a parliament distinct from any existing body, is a question which for the present may remain an open one. In the immediate future the Canadian, the Australian, the South African, and the Briton has each his own work to do in creating or strength- ening the four great federations on which Imperial Federation will some day be built. THE FINANCE OF FEDERAL GOVERNMENT FOR THE UNITED KINGDOM (A Paper read before the Royal Statistical Society, January 1903) The great and increasing difficulty of carrying on the business of a vast empire, the affairs of the United Kingdom as a whole, and the domestic concerns of England, Wales, Ireland, and Scot- land, with our present constitutional machinery, is generally admitted. The congestion of business in the House of Commons has become so serious as to threaten a breakdown in parliamentary government. Two remedies present themselves. On the one hand, the congestion of business in Parliament might be relieved by the establish- ment of an Imperial parliament, with Colonial representatives, to deal with all Imperial business. For this remedy public opinion is not yet ripe, either in the Mother Country or the Colonies. The Colonies are not yet prepared to tax them- selves for the maintenance of the Navy and Army, and until they are prepared to bear their fair share of Imperial burdens they have no right to a voice in the control of Imperial policy. 106 PROBLEMS OF EMPIRE On the other hand, it is possible for Parliament, while retaining in its own hands Imperial business, as well as all matters affecting the United Kingdom as a whole, to hand over to subordinate legis- latures in England, Scotland, Ireland, and possibly in Wales, the power to deal with the internal affairs of each country. This implies the estab- lishment of a federal form of government in the United Kingdom, somewhat similar to that which exists in Canada. It would be out of place to give the arguments for and against this great reform in our Constitution in this paper, which is based on the assumption that such a reform has become a necessity. The main difficulty in devising a workable scheme of federal government for the United Kingdom is that of adjusting the financial re- lations between the Imperial government and the subordinate national legislatures. It has been asserted that Imperial cannot be separated from national finance, and that the problem is so complex as to be insoluble. Problems which have been solved in other countries, such as Germany and the United States, and under the British flag in Australia and Canada, cannot, however, be admitted to be beyond the capacity of British statesmen. It is, at any rate, well that in a society of experts such as this, they should be ventilated and discussed ; and it is as a humble contribution to the discussion that I venture to offer this paper. Though the principal FEDERAL GOVERNMENT FINANCE 107 suggestion is my own, most of its conclusions are the result of much discussion with others. In order to appreciate the conditions of the problem, it is necessary to study ' The Return of Revenue and Expenditure ' ^ (England, Scot- land, and Ireland) annually issued under the authority of Parliament. Revenue as contributed . Expenditure on civil admin- \ istration (excluding charges on Consolidated Fund, cost of collection of customs, ■ half cost collection inland revenue,* and Post Office expenditure Balances available for Im- perial expenditure, includ- ■ ing Post Of&ce England. Scotland. Ireland. i 113,244,000 22,559,000 I 14,919,000 3,227,000 i 9,505,000 5,919,000 90,685,000 11,692,000 3,586,000 * If a proportion of the inland revenue (e.g. income tax and estate duties) is reserved to the Imperial authority, the cost of collection of this revenue should be an Imperial charge. This has been roughly estimated at half the local cost of collection of the inland revenue. The first fact brought out by this return is that the expenditure for Imperial purposes (including the expenditure on Post Office services as Imperial, for reasons which will appear later) represents about three-fourths, and the national expenditure only one-fourth of the total expenditure. The second fact to which it is necessary to call especial attention is, that the different countries of the United Kingdom at present demand for ' The figures for igoo-i have been used in this paper as more nearly approaching to the normal than the figures of 1901-2. 108 PROBLEMS OF EMPIRE their civil administration very different pro- portions of the revenue which they contribute to the Exchequer, and consequently their con- tributions to the Imperial expenditure are not proportionate to their revenues. The expenditure on civil administration in Ireland is nearly double that of Scotland, the excess in Ireland being mainly under the head of law charges and police.^ Thus, while England contributes 80 per cent, and Scotland 78-4 per cent., Ireland only con- tributes 37'8 per cent, of her revenue to Imperial purposes. From this fact it results that it is impossible to adjust the financial relations between the Imperial and national authorities on a general plan applicable to each country alike. Thirdly, it must be noted that Imperial expenditure exceeds the proceeds of either direct or indirect taxation, so that it cannot be defrayed out of either taken alone. Having stated the principal difficulties of the problem before us, it becomes necessary to deter- mine the conditions of a satisfactory solution. I. The Imperial revenue must be elastic, and therefore ought to he drawn from sources capable of producing a considerable and immediate increase. — If the Empire becomes involved in war, if a large increase in shipbuilding for the Navy is required 1 Cf. Table IV. in Appendix. The Royal Irish Constabulary in igoo-i cost ;£i,34i,ooo, and the Dublin Metropolitan Police ;£93,ooo. If the police force in Ireland were on the same scale relatively to population as that in England, it should cost about half the above sum. FEDERAL GOVERNMENT FINANCE 109 owing to the activity in foreign navies, the Chan- cellor of the Exchequer has immediately to raise funds. The income-tax is the first tax to which he resorts. It is essentially his reserve to meet demands such as those described. It clearly cannot be handed over to the national authorities ; and the same remark applies in a somewhat lesser degree to customs and excise. 2. It is desirable that the revenues of loth the Imperial and national authorities should he raised from direct as well as indirect taxes, so that neither may he felt to press unduly on any class of the community. — There are four principal heads of taxation : Customs, excise, estate duties, and income tax. The two latter fall almost entirely on the well-to-do classes, the former on the whole community. If the Imperial authority were to depend altogether on the revenue from customs and excise, and the national authority on that from estate duties and income tax, or vice versa — in other words, if the whole burden of one or other category of expenditure fell on a limited class of taxpayers, and the masses of the people who possess the voting power were unaffected by it — there would be no efficient check on extravagant expenditure for Imperial or national purposes. 3. It is desirable that the Imperial authority should have under its own control sufficient revenues to meet the Imperial expenditure. — If the Imperial authority had to call on the national authorities to contribute to Imperial funds in the event of 110 PROBLEMS OF EMPIRE war or for any other reason, there would obviously be grave danger of conflict between the Imperial and national authorities. The war for which the increased expenditure was required might be unpopular in one of the countries of the United Kingdom (a recent instance of this ^ will occur to everyone here present) ; that country might, and probably would, refuse to make the contribution required by the Imperial authority. How in this case is the contribution to be collected ? To collect revenue at the point of the bayonet is an impossibility. It is therefore necessary that a scheme for adjusting the financial relations between the Imperial and national authorities should provide the former with sufficient sources of revenue to meet Imperial expenditure under all circumstances. Grants may have to be made from Imperial funds to meet national expenditure. Indeed, such a grant will certainly have to be made in some form or other, at any rate for a period, in the case of Ireland. 4. It is necessary to treat Ireland on exceptional lines. — This necessity does not only arise from the greater cost of civil government in Ireland, but from the fact that Ireland is a poorer country than England and Scotland. The reports sub- mitted by various sections and individual members of the Royal Commission on the Financial Rela- tions between Great Britain and Ireland are ' The attitude of Irish representatives on the South African war. FEDERAL GOVERNMENT FINANCE 111 unanimous on the point that Ireland contributes to the general revenue a sum largely in excess of the proportion which she would contribute were that contribution based on her relative taxable capacity. Mr. Childers places this excess at 2|- millions per annum. Two other considerations of great importance must be noted. The commercial and fiscal policy of the United Kingdom has been guided mainly by the interests of Great Britain ; and while there has been during the last sixty years an enormous increase in the material well-being of the people of Great Britain, the population of Ireland has diminished to nearly one-half, largely owing to the heavy decline in the value of agri- cultural produce, and the consequent restriction of the demand for agricultural employment. Mr. Childers summed up the grounds for the claim of Ireland to special treatment as follows : — ' Ireland being a country mainly inhabited by agricultural producers, could support its present population upon the corn and meat produced there without having recourse, under ordinary circumstances, to a foreign supply of these articles, and could, at the same time, export a surplus of these foodstuffs. The popu- lation of Ireland consumes a rather large amount, in proportion to its wealth, of spirits, tea, and tobacco. This being so, it does not appear that a fiscal system which raises no ^ revenue from foreign foodstuffs, but does raise a large revenue from spirits, tea, and tobacco, is advan- 112 PROBLEMS OF EMPIRE tageous to the population of Ireland, although it may be advantageous to the population of the United Kingdom looked at as a whole. It may even perhaps be said that just as Ireland suffered in the last century from the protective and exclusive commercial policy of Great Britain, so she has been at a disadvantage in this century from the adoption of an almost unqualified free- trade policy for the United Kingdom.' Secondly, the extension to Ireland of the income-tax, and the equalisation of the spirit duties during the period 1853-60, imposed an increased burden on the Irish taxpayer amounting to nearly two millions a year. 5. It is desirable that the Local Taxation Account should disappear altogether from the accounts of the Imperial Exchequer, and that the National Legislatures should deal in future with all grants in aid of Local Taxation. — The local taxation revenue is derived from customs, excise duty, and estate duty. The amounts contributed under each head in igoo-i are as foUows : — Customs Excise — Spirits . Beer Licences . Total excise Estate duties England. Scotland. Ireland. Total. £ 183,000 i 19,000 16,000 218,000 624,000 399,000 3,516,000 187,000 20,000 370,000 106,000 31,000 917,000 450,000 3,885,000 4,539,000 577,000 137,000 5,253,000 3,550,000 474,000 141,000 4,237,000* * Including ;£72,ooo from Imperial sources. FEDERAL GOVERNMENT FINANCE 113 In addition to the above, there are payments from the Exchequer revenue to local taxation accounts of ^98,900 in the case of Scotland, and £1,054,000 in the case of Ireland. Local taxation has been the subject of inquiry by a Royal Commission, which issued its final report in 1901. It appears unnecessary for our present purpose to enter at length into the history of the grants in aid of local taxation ; but the following facts and conclusions, sum- marised from the report of Sir George Murray and Sir Edward Hamilton, must be noted. In 1888 nearly the whole of the licence duties and a proportion of the probate duty were assigned under Mr. Goschen's proposals to the local taxa- tion account — the object of the latter being to secure a contribution from personalty to local finance. In 1890 the beer and spirit surtaxes imposed in that year were assigned to the councils of counties and county boroughs, to be applied by them to technical instruction. On this Sir George Murray and Sir Edward Hamilton remark, ' There seems to be no reason why these surtaxes should be so assigned, any more than any other fraction of the pubUc" revenue, since they are in no way local, and have nothing to do with tech- nical education, or any other service locally administered.' The Finance Act of 1894 imposed a uniform system of death duties on realty and personalty alike, and the contribution in aid of local rates can no longer be identified as a 114 PROBLEMS OF EMPIRE contribution by personalty. It has become simply a grant out of the general revenue of the country. In 1896 a portion of the estate duty on personalty was assigned to provide the relief given to agri- cultural land under the Agricultural Rates Act. In Acts subsequently passed for Scotland and Ireland, the assistance to the ratepayers has been provided by a direct charge on the consoli- dated fund, because the proceeds of the estate duty on personalty in Ireland were insufficient for the purpose in view. The result is that there is one arrangement in force in England, and another in Scotland and Ireland. The present system of assigned revenues therefore confuses the public accounts, which consequently do not show the expenditure for which the State has made itself responsible, and also the local accounts, making it difficult to ascertain the relief afforded to the ratepayers by the Exchequer. For the above reasons we may conclude that there is no advantage in continuing the present system of assigned revenues, under which the surtaxes on beer and spirits, the hcence duties, and a proportion of the estate duties, are ear- marked for the local taxation account, and that the grants now given from these sources in aid of local taxation can be as well or better met by a contribution from general revenue. If this be the case, it follows that such grants can be made from the revenues handed over to the national authorities just as well as from FEDERAL GOVERNMENT FINANCE 115 Imperial funds, and that there will be no neces- sity, under a scheme of Federal government, for complicating Imperial finance with a local taxa- tion account. It has been necessary to make this point clear, so that we may not be prevented from dealing with customs, excise, and estate duties, as seems best, when we come to suggesting an adjustment of the financial relations between the Imperial and local authorities. 6. The control of Customs and Excise Duties on Beer and Spirits must be reserved to the Imperial Parliament. — Customs duties appear clearly to belong to the province of the Imperial authority ; though it has been suggested (notably in the report of Lords Farrer and Welby and Mr. Currie on the Financial Relations between Great Britain and Ireland) that Ireland should be given control of all sources of taxation. Excise, including beer and spirits duties, ought primd facie to be in the hands of the national authorities. On the other hand, excise duties are closely related to customs duties, and if the national authorities were given power to deal with the excise duties as they pleased, and the several authorities imposed (as they probably would impose) duties at different rates in the several countries, it would necessitate the erection of customs barriers be- tween England, Scotland, and Ireland. The incon- venience would hardly be tolerated in the present state of opinion. The fixing of the rate, not only of customs duties but of the excise duties on beer 116 PROBLEMS OF EMPIRE and spirits, must therefore remain under Imperial control. 7. The Post Office should remain under Imperial control. — There is obviously great convenience in retaining the administration of the Post Office in the hands of the central authority. Nearly the whole of the profit of the department is made in England. In Scotland the profit is but small ; in Ireland the Post Office is worked at a loss.^ Though there might be some desire on the part of the national authorities to take over the Post Office administration on account of the patronage involved, it is here assumed that the Post Office will remain under Imperial control. 8. Certain items of revenue which are peculiarly suitable for management by the national authorities should be allocated to them. — These include licences and railway duty, land tax and inhabited house duty, and miscellaneous revenue, from which the revenue in igoo-i was as follows : — Licences Railway duty Land tax and house duty Miscellaneous duty England. Scotland. Ireland. £ 3,550,000 315,000 2,321,000 792,000 i 375,000 24,000 146,000 82,000 i 211,000 116,000 Of the total revenue, amounting to ;^4, 136,000, derived from licence duties, no less than £3,886,000 is local taxation revenue. On Mr. Goschen's origi- nal proposal to hand over to the local authorities • In 1900-1 revenue ;^903,ooo, expenditure ^£1,061, 000. FEDERAL GOVERNMENT FINANCE 117 the collection and variation of the licence duties, the Royal Commission remarks : ' It cannot be doubted that in the case of such licences as the dog and establishment licences, the collection of the duties by the local authority would add considerably to their yield.* Whether the licence duties should be collected by the national or local authorities is a question which need not concern us here. It is, at any rate, clear that they should not form part of the Imperial revenues. The land tax and inhabited house duty appear to belong more properly to the department of national than Imperial finance. The fact that in Ireland no such taxes at present exist gives considerable scope to the national authority for raising additional revenue, should such be required. The total miscellaneous revenue in 1900-1 was £2,237,000, of which £1,247,000 was derived from Imperial sources, and the balance from the respec- tive countries to the amount given above. With the possible exception of the revenue derived from the Bank of England (£178,000) the mis- cellaneous revenues should clearly be handed over to the national authorities. The revenue from Crown lands amounts to £465,000, of which £408,000 is derived from England, £24,000 from Scotland, and £33,000 from Ireland. On the whole it appears desirable to hand over the Crown lands to the national authority. We are now in a position to discuss alternative proposals for adjusting the financial relations 118 PROBLEMS OF EMPIRE between the national and Imperial authorities. It is possible to proceed on one of two main principles. Under the first, the quota which each country is to contribute to Imperial expenditure would be fixed, the national authorities taking the whole balance of the revenue after their quota is paid into the Imperial exchequer. Under the second, each country would be given sufficient revenue to meet its estimated expenditure on civil government, together with such powers of taxation as would enable the national authority to meet any increase in such expenditure, the Imperial authority retaining in its own hands for Imperial purposes all revenues not handed over to the national authority, as well as the power to impose fresh taxation. If the first principle were followed, the quota to be borne by each country would have to be fixed by Royal Commission. If the second principle were adopted, the expenditure on civil government in the respective countries being ascertained, the national authori- ties would be given sufficient revenue to meet their expenditure. Excluding civil government expenditure charged on the consolidated fund (over three-fourths of which represents expenditure on courts of justice). Post Office expenditure, cost of collection of customs, which would in any case remain an Imperial charge, and half the cost of collection of inland revenue, some items of which would be allocated to the Imperial and FEDERAL GOVERNMENT FINANCE 119 others to the national authorities, the national expenditure (or local expenditure, as it is called in the returns) in igoo-i was as follows : — National expenditure (Part III.) Return .... Deduct — Post Office expenditure Collection customs Half collection inland revenue Charges on consolidated fund Expenditure on civil govern- ment .... England. Scotland. Ireland. i 34,769,000 I 4,961,000 7,306,000 10,457,000 663,000 768,000 322,000 1,352,000 97,000 147,000 138,000 1,061,000 63,000 91,000 172,000 12,210,000 1,734,000 1,387,000 22,559,000 3,227,000 5,919,000 Of the above expenditure, ;fi2, 500,000 is devoted to education, and nearly £11,000,000 represents grants in aid of local taxation. Provided that the national authorities are given at the outset sufficient revenues to meet the above expenditure, and adequate powers of taxation to enable them to meet any possible increase, a plan based on this principle appears to be as fair to them as that of fixing the quota which they are to contribute to Imperial ex- penditure. Moreover, a plan based on this principle has great advantages : (i) it is simple and easily intelligible ; (2) it obviates the necessity for periodical inquiry as to taxable capacity ; (3) it adjusts the financial relations on a basis which has a reasonable prospect of being perma- nent ; (4) it gives the national authorities a sense of financial responsibility, and would tend to check 120 PROBLEMS OF EMPIRE extravagant expenditure, a point of the utmost importance ; (5) it is fair to the Imperial authority, and would enable surplus revenue from sources reserved to the Imperial authority to be used for the reduction of the national debt. Under a plan based on the first principle, the quota to be contributed by each country being fixed, the whole of the surplus due to an expanding revenue would go to the national authority, who would use it for its own purposes. The following plan is based on the first principle :— The quota of Imperial expenditure to be borne by each country to be fixed (subject to periodical revision in accordance with pre- determined principles). The exceptions to the powers of the national legislatures in finance should include only customs, excise (excluding licences and railway duty), and postal rates ; all powers over these sources of revenue should be reserved by the Imperial Parliament to itself. Excepting the reservation of licences and rail- way duty to the national legislature, the Imperial Parliament would also have full and unfettered power to impose whatever other taxes might be necessary to meet its expenditure, provision being made for the adjustment of balances between the Imperial exchequer and the several nationalities, in accordance with the quota due from each of the latter. And beyond this reservation (but not within it) the national legislatures would FEDERAL GOVERNMENT FINANCE 121 also have full power to impose any taxes required to meet their several expenditures. Thus there would presumably be a concurrent use of income- tax, estate duty, and stamp duties by the Imperial and national authorities. The advantages of this plan are claimed to be that while it leaves the Imperial Parliament entirely unfettered as to means of raising its revenue, it imposes on the national legislatures only such restraints as are involved in the common fiscal and trade policy of the United Kingdom. Its disadvantages are : (i) that the elasticity of the Imperial revenues would be impaired, and (2) that the concurrent use of the same taxes by the national and Imperial authorities would lead to complication of accounts and difficulties in collection. As regards the first objection, it is practically certain that the national authorities would resort to the use of income-tax and estate duty. Assuming that both the Imperial authority and the national authorities levied an income-tax, the income-tax would be fully utilised in time of peace, and there would be little, if any, reserve to meet the emergencies of war. As regards the second objection, it must be admitted that under the Constitution of the Australian Commonwealth concurrent powers of taxation are granted to both the Commonwealth and State Parliaments. The collection and control of customs and excise are vested in 122 PROBLEMS OF EMPIRE the Commonwealth ParUament, but the States retain the power to impose customs and excise duties until the imposition of uniform duties by the Commonwealth. For ten years after the estabhshment of the Commonwealth not more than one-fourth of the net revenue from customs and excise may be applied by the Commonwealth to its own expenditure. The conditions in the United Kingdom and Australia are utterly dis- similar. In Australia the major part of the expenditure is state or local, and there was no pre-existing Commonwealth debt charge. In the United Kingdom, which has to bear practically the whole burden of defending the Empire, three-fourths of the expenditure is Imperial, and only one-fourth is local or national. A plan which may be workable in Australia may be totally inapplicable to the United Kingdom. The objections to this plan, and to the principle on which it is based, may be summarised as follows : — 1. An elaborate inquiry must be held periodi- cally to fix the quota to be contributed by each country to Imperial expenditure. Such inquiry would lead to friction and to constant agitation on the part of the different countries that their quota should be reduced. 2. No sufficient financial responsibility would be imposed on the national authorities for meeting their new expenditure. 3. A budget surplus would belong to the national authorities and not to the Imperial FEDERAL GOVERNMENT FINANCE 123 authority, and therefore could not be utilised for the reduction of the national debt. 4. To allow to the national authorities the concurrent use of income-tax would impair the elasticity of the Imperial revenues, and would fetter the action of the Imperial Chancellor of the Exchequer in meeting a national emergency. 5. The concurrent use of the same taxes would lead to difficulties of collection and con- fusion of accounts. These objections are, in my judgment, fatal to the plan and to the principle on which it is based. Let us now see whether it is possible to devise a plan based on the principle of providing the national authorities with sufficient revenue to meet the national (including local) expenditure. The minor branches of revenue, viz. licences, railway duty, land tax, inhabited house duty, and miscellaneous revenue, would produce only a small proportion of the sum required in each case. What other branches of revenue can be handed over to the national authorities ? Customs and income-tax must, for the reasons already given, clearly remain in Imperial hands, and whatever may be done with the revenue derived from the beer and spirit duties, the rates of duty must be fixed and the duties collected by the Imperial authority. Excise duties on beer and spirits constitute, with the exception of customs, by far the largest item of the revenue contributed 124 PROBLEMS OF EMPIRE by Ireland. Customs and excise duties on beer and spirits together account for over six millions out of a total revenue of g^ millions. Estate duties seem on the whole more suitable for Imperial management than for national control ; and if the revenue from estate duties were handed over to the national authorities, there would be a surplus in the case of England, and a deficiency in the case of Scotland and Ireland. This deficiency would have to be made good by grants from the Imperial exchequer. The claim of Ireland to special treatment, for the reasons given earlier in this paper, might render it desirable to hand over the estate duties in Ireland to the Irish national authority. Stamps, on the other hand, appear better suited for national control than any of the other items of revenue we have been considering. If the revenue from stamps, in addition to the minor branches of revenue already mentioned, were handed over to the national authorities, the position would be as follows : — Licences .... Railway duty Laud tax and house duty stamps .... Miscellaneous revenue . Crown lands Expenditure on civil adminis- tration .... Deficiency England. Scotland. Ireland. £ 3,550,000 315,000 2,321,000 6,939,000 792,000 408,000 £ 375.000 24,000 146,000 623,000 82,000 24,000 £ 211,000 290,000 116,000 33,000 14,325,000 1,274,000 650,000 22,559,000 3,227,000 5,919,000 8,234,000 1,953.000 5,269,000 FEDERAL GOVERNMENT FINANCE 125 This deficiency could be made good by grants from the Imperial exchequer, and this is the course which commends itself to some of those who have studied the subject with me. The objections to it are that the proportion of the revenues of the national authorities which would be allocated to them, or under their own control, would be insufficient to give that sense of financial respon- sibility which it is so desirable that they should possess. This objection applies with especial force to the case of Ireland, in which only one- eighth of the national revenue would be allocated to the national authority. ' Grants of money,' say Lord Farrer, Lord Welby, and Mr. Currie in the report already quoted, ' made by Parliament are more likely to impoverish than enrich the community which receives them, tending as they do to weaken the spirit of independence and self-reliance.' To this weighty opinion I attach the utmost importance. The system of grants from the Imperial revenue in aid of local taxation certainly does not tend to economy in local expenditure. A plan based on large grants from the Imperial exchequer to the national authorities would have a similar effect on national expenditure. There is a further objection that the cordial co-operation of the national authorities would not be secured if the whole of the proceeds of excise were paid into the national exchequer. Illicit distilling and frauds on the revenue would become rife, unless the national authority had 126 PROBLEMS OF EMPIRE a direct interest in seeing that the police forces under their control gave effective assistance to the Imperial revenue officers in the collection of the beer and spirit duties. These objections appear of such weight that I venture to submit the following plan : The national authorities to be given the minor branches of revenue, stamp duties, licences, &c., together with the power of imposing new taxes (e.g. additional stamp duties, licence duties, taxes on advertisements and amusements). The Imperial authority to reserve to itself the revenue from customs, income-tax, and estate duties, except in the case of Ireland. The revenue from estate duties in Ireland to be handed over to the Irish national authority. The revenue from the excise duties on beer and spirits to be treated as follows : In Ireland the whole, in Scotland one-half, and in England one-third to be handed over to the national authorities, the rates of duty being fixed, and the duties collected by the Imperial authority. The Imperial authority, of course, to have the power of imposing new taxes. The revenue from the beer and spirit duties in igoo-i was thus distributed (true contributions): Spirits ..... Beer England. Scotland. Ireland. £ 13,704,000 12,361,000 4,096,000 614,000 £ 2,324,000 966,000 26,065,000 4,710,000 3,290,000 FEDERAL GOVERNMENT FINANCE 127 One-third of the beer and spirit duties in England = £8,688,000, one-half in Scotland = £2,355,000. The financial result of this plan is therefore as follows : — Revenue handed over to ) national authorities . j Estate duties Add beer and spirits duties,') proportions handed over j Expenditure on civil'adminis- "^ tration . . . . ) England. Scotland. Ireland. I 14,325,000 8,688,000 I 1,274,000 2,355,000 £ 650,000 874,000 3,290,000 23,013,000 22,519,000 3,629,000 3,227,000 4,814,000 5,919,000 Surplus. 494,000 Surplus. 402,000 Deficiency. 1,105,000 The deficiency shown in the above table in the case of Ireland might be met by assistance from Imperial funds for a fixed period of, say, ten years. Such assistance might be given by the Imperial authority retaining the control of, and bearing the whole of the charges for, the Royal Irish Constabulary and the Dublin police, but handing over to the national authority any saving from the gradual replacement of the semi-military police by less costly forces under the control of local authorities ; or, if the con- trol of the constabulary be surrendered by the Imperial Parliament, by a grant equivalent to the present cost of maintenance (viz. about £1,400,000). Ireland would be started with a surplus of £300,000, which should be increased at the end of the period to £1,000,000 by savings on the police force alone. Large savings may 128 PROBLEMS OF EMPIRE be anticipated under other heads of civil govern- ment expenditure, which in Ireland is admit- tedly excessive. All savings would be under the control of the national authority, and could be utilised for the purpose of developing the resources of the country. For this plan the following advantages may be claimed : — 1. The national authorities would be pro- vided with sufficient revenue to meet their national expenditure, and they would not depend (with the exception of the grant suggested for a specific purpose to Ireland) on doles or grants-in-aid from the Imperial exchequer, which are open to the gravest objection. 2. The revenue permanently allocated to Ireland should suffice not only to meet the cost of civil government when Ireland is governed with the consent of its inhabitants, but to yield a handsome surplus. If Ireland is governed for the same cost as Scotland, this surplus should amount to i^ millions per annum, which could be used either for remitting taxation or on works of public improvement. 3. The Imperial revenue would be elastic, for the Imperial authority, though parting to some extent with the revenue from excise, would retain in its own hands income-tax as well as estate duties (except in the case of Ireland), and customs. Income-tax is by far the most elastic branch of the revenue, and is that which in the FEDERAL GOVERNMENT FINANCE 129 case of an increase or decrease of the tax rate gives the most definite and calculable and im- mediate result. It is this which makes it so important as a tax to meet Imperial emergencies. 4. The Imperial revenue as well as the national revenues would be raised from direct and indirect taxes. 5. The Imperial authority would reserve to itself sufficient sources of revenue to meet Imperial expenditure, and would not have to rely on contributions from the exchequers of the several countries. 6. There would be little difficulty in collecting the beer and spirit duties, and in preventing frauds on the revenue, and these duties would be wiUingly paid if the whole or a considerable proportion were earmarked for national purposes and paid into the national exchequer. 7. It imposes on the national authorities the financial responsibility of meeting their expen- diture, to the extent that if their expenditure increases they must raise funds to meet the increase ; and if economies are made, they can reap the benefit of those economies. The strongest objection which has been urged against the scheme, and it has been urged by one whose opinion is entitled to the greatest respect, is that the hands of the Chancellor of the Exchequer would be tied if he wished to change the rates of the beer and spirit duties. For every additional pound he wished to raise for Imperial needs, he would be obliged to raise a 130 PROBLEMS OF EMPIRE further sum of, say, one pound, which would have to be handed over to the national exchequers, although they might not need it. If, on the other hand, he wished to reduce the duties, he would be debarred from doing so by the consider- ation that the national authorities would be suddenly deprived by his action of revenue on which they were counting. These objections might be overcome in the following way. If the Chancellor of the Exchequer wished to in- crease the duties, it could be provided^ that the additional yield of a duty, declared by Parlia- ment to be a war or emergency tax, should go to the Imperial exchequer. If, on the other hand, he wished to reduce the rates of duty, grants could be made from Imperial funds to the national authorities to an amount equivalent to the loss of revenue they had suffered owing to the reduction of the rates of duty. It may be admitted that the treatment of excise pro- posed would have a tendency to render this important branch of revenue non-elastic, and yet the advantages of the plan may be held to outweigh this disadvantage. The problem of adjusting the financial re- lations between the Imperial and national authorities is one which presents many difficulties, from the peculiar features of the case. Every solution is open to objections. I believe, from 1 Cf. financial scheme of Home Rule Bill, 1893, adopted in Committee of the House of Commons, clause 6 : ' That if any special war tax should be imposed, the whole proceeds collected in or contributed by Ireland should go to the Imperial exchequer.' FEDERAL GOVERNMENT FINANCE 131 the study I and others have given to the subject, that the plan suggested in this paper is open to fewer objections than any other. APPENDIX EXTRACTS FROM PARLIAMENTARY RETURN gO, DATED JULY 8, IQOI, ' REVENUE AND EXPENDI- TURE (ENGLAND, SCOTLAND, AND IRELAND)' TABLE I Part I. — Revenue, igoo-i. i. Revenue (Net Receipts) [ooo's omitted] Customs — Exchequer revenue Local taxation revenue . Excise — Exchequer revenue Local taxation revenue . Estate, &c., duties — Exchequer revenue Local taxation revenue . Stamps .... Land tax . . "1 House duty . . J Income-tax Total revenue from taxes Post office Telegraphs Crown lands . Interest on Suez Canal shares, &c. . Miscellaneous . Total non-tax revenue . Aggregate revenue Per cent. . (a) For the Exchequer . (b) For the local taxation" accounts As Contributed. From Imperial Sources. By England. By Scotland. By Ireland. Total. £ 143. 72. 35. 358. £ 20,915, 183. 25,391. 4,539. 10,417, 3,550, 6,939. 2,321, 23,212, £ 2,558, 19, 4,532, 577, 1,191, 474. 623, 146, 3,016, £ 2,798, 16, 3,364, 137. 732, 141, 290, 975, £ 26,271, 218, 33,287, 5,253. 12,483, 4,237. 7,887. 2,467. 27,561, 608, 97,467, 13,136, 8,453, 119,664, 830, 1,247. 11,722, 2,855. 408, 792, 1,326, 351. 24. 82, 729, 174. 33. 116, 13,777, 3,380, 465, 830, 2,237, 2,077, 15,777. 1,783. 1,052, 20,689, 2,685, 191 113,244, 80-69 14,919. 10-63 9,505, 6-77 140,353, lo-ooo 2,613. 72, 104,972, 8,272, 13,849, 1,070, 9,211, 294, 130,645, 9,708, 132 PROBLEMS OF EMPIRE TABLE II Part II; — Expenditure, 1900-1. (Exchequer Issues) [ooo's omitted] 1. Chargeable against exchequer revenue — National debt charges . Naval and military charges — (a) Army . (6) Navy . Civil government charges — (a) On consolidated fund (6) Voted . Total civil government charges . Collection of taxes Post office services Payments of local taxa- \ tion account . f Total chargeable against exchequer revenue . 2. Met out of local taxation revenue — Micellaneous local charges Grand total Per cent., England, Scot- \ land and Ireland / Per cent., total On Imperial Services. On English Services. On Scottish Services. On Irish Services. Total. £ 19,836, 91,925, 29,520, £ £ £ £ 19.836, 91,925, 29,520, 723, 3,690, 322, 13,481, 138, 1,955. 171. 4.374. 1,354. 23,500, 4,413, 13,803, 2,093, 4,545, 24,854. 601, 2,199, 10,457. 391, 1,352, 98, 244, 1,061, 1,054, 2,834, 13,471, 1,152, 146,295, 26,459, 3,934. 6,904, 183,592, 8,310. 37.297. 1,027, 402, 9,739, 146,295, 34,769, 4,961, 7.306, 193.331, 75-67 73-92 17-98 47,036, 10-55 2-57 15-53 378 100-00 loo-oo FEDERAL GOVERNMENT FINANCE 133 TABLE III Civil Government Charges, igoo-i. Details of Class III Imperial. English. Scotch. Irish. Total. £ £ £ £ £ Law charges. 63,000 63,000 Miscellaneous legal ex- i penses . . I Supreme court of judica-1 ture ... J 13,000 34.500 500 48,000 — 318,000 — — 318,000 Land registry — 39,000 — — 29,000 County courts — 20,000 — — 20,000 Police (England and Wales) — 51,000 — — 51,000 Prisons (England and the i Colonies . . ) 3,000 605,000 — — 608,000 Reformatory and indus- trial schools (Great — 193,000 61,000 — 254,000 Britain) . . j Broadmoor criminal •> lunatic asylum . J 41,000 41,000 Scotland. Law charges and courts i of. law . . i — — 76,000 — 76,000 Registry house, Edinburgh — — 42,000 — 42,000 Crofters commission — — 5,000 — 5,000 Prisons — — 84,000 — 84,000 Ireland. Law charges and criminal I prosecutions . ' — — — 64,000 64,000 Superior court of judica- ture and other legal ■ — — — 106,000 106,000 departments . ) Land commission . — — — 128,000 128,000 County court officers, &c. — — — 106,000 106,000 Dublin metropolitan police (including police ■ — — — 93.000 93,000 courts) Constabulary — — — 1,341,000 1,341,000 Prisons — — . — 115,000 115,000 Reformatory and indus- trial schools — — — 108,000 108,000 Dundrum criminal luna- 1 tic asylum . . ' Total of Class III. 6,000 6,000 16,000 1.354.500 268,000 2,067,500 3,706,000 134 PROBLEMS OF EMPIRE TABLE IV Civil Government Charges, igoo-i Class I. Palaces l Imperial. English. Scottish. IrUh. Total. I i i I I and public buildings 192,500 1,265,000 143,500 409,000 2,010,000 Class II. Public of&ces 1,002,000 886,000 137,000 334,000 2,359,000 Class III. Law] charges and police 16,000 1,354.500 268,000 2,067,500 3,706,000 Class IV. Educatio n 43,000 9,696,500 1,383,000 1,413,500 12,536,000 Class V. Diplom- atic and colo- . 2,084,000 _ 2,084,000 nial services Class VI. Pensioi IS 242,500 270,000 22,500 99,000 634,000 Class VII. Miscel- laneous Total civil govern- ment charges voted Customs 110,000 9,000 1,000 51,000 171,000 ■ 3,690,000 13,481,000 1,955,000 4,374,000 23,500,000 — 663,000 97,000 63,000 823,000 Inland revenue Total collection of taxes Post Oface . — 1,536,000 294,000 181,000 2,011,000 2,199,000 391,000 244,000 2,834,000 — 7,288,000 930,000 745,000 8,963,000 Telegraph service — 3,104,000 381,000 252,000 3,737,000 Packet Total Post Office services Total revenue de- partments . 601,000 65,000 41,000 64,000 771,000 j 601,000 10,457,000 1,352,000 1,061,000 13,471,000 1 601,000 12,656,000 1,743,000 1,305,000 16,305,000 FEDERAL GOVERNMENT FINANCE 135 TABLE V Contribution to Imperial Services [coo's omitted] Year 1900-1. England. Per cent. Scot- land. Per cent. Ireland. Per. cent. Total. Per cent. Total revenue ] as contributed J Local expen- ') diture j Balance avail- ^ able for Im- f perial expen- C diture ) £ 113,224, 34,769, 8226 73'92 £ 14,919, 4,961, 10-84 io'55 £ 9,505, 7,306, 6-90 1553 £ 137,668, 47,036, 100 100 78,475, 86-58 9,958, 10-99 2,199, 2-43 90,632, 100 f. This table shows the balances of revenue contributed by England, Scotland, and Ireland, respectively, which are available for Imperial expenditure after the local expenditure of those divisions of the United Kingdom has been met, according to the figures shown in Parts I. and II. of this return. It should be borne in mind that in the last quarter of 1900-1, as in the last quarter of 1899- 1900, abnormal clearances of certain dutiable articles were effected in anticipation of increased taxation. The result was that in these years the amount paid in duty in respect of some articles did not correspond with the consumption of those articles nor consequently with the con- tribution of consumers to taxation. The amounts estimated to have been paid in anticipation in 1900-1 were £2,500,000 under customs duties, and ;£i, 050,000 under excise duties. PREFERENTIAL TARIFFS (A Letter to the Times, June 5, 1903) Sir, — The policy recently outlined by Mr. Balfour and Mr. Chamberlain will, I trust, receive the serious and unprejudiced consideration of the people of this country. That it should be made the subject of party controversy, that it should be discussed on political platforms without regard to recent experience or present-day facts, and that the truth should be obscured by misrepre- sentation and exaggeration, as has been the case with the corn duty, would be deplorable. The decision which the people will be presently called upon to take is of vital moment to their own future, the future of the Empire, and the future of the world. Commercial federation on the basis of Free Trade within the Empire is out of the question in the immediate future, for the obvious reason that most of our Colonies raise the greater part of their revenues from customs duties, that British goods form a large proportion of their imports, and that it would take time for the Colonial governments to substitute other sources PREFERENTIAL TARIFFS 137 of revenue for that which they now derive from duties on British goods. Sixteen years ago, at the first Colonial Conference, Mr. Hofmeyr pro- posed that every part of the Empire, whatever its tariff might be on Imperial goods, should impose a differential duty on non-Imperial goods, the proceeds of this duty to be devoted to the maintenance of the Imperial Navy. Commercial federation on the basis of preferential trade within the Empire, as suggested by Mr. Hofmeyr in 1887, is the only form which Mr. Chamberlain's policy can take at the present moment. In a paper read before the Colonial Institute in November last, I pointed out that a commer- cial federation which did not impose a duty on foreign foodstuffs for the benefit of the Canadian wheat-grower, or the Australian meat-producer, would be of little value to our Colonies. Mr. Chamberlain has frankly acknowledged that preferential trade means a tax on food. The question therefore which the British people have to ask themselves is whether there are any reasons which make it worth their while to submit to a tax on the necessaries of life with a possibility of a rise in price. Excluding the political argu- ments in favour of commercial federation, which have been dealt with by Mr. Chamberlain and Sir Robert Giffen, the following appear to be worthy of their consideration. I. The burden of defending the Empire is becoming too heavy for the taxpayers of these 138 PROBLEMS OF EMPIRE islands alone. The estate duties, from which a large part of our revenue is now derived, press very hardly on a particular class. Many families, by their imposition, have been taxed out of their homes. An income-tax of nearly five per cent, on the profits of commerce and industry is a great handicap to British trade. The duties on tea and sugar, which are as much necessaries of life for the people as wheaten bread was sixty years ago, are heavy. The rate of excise duties on beer and spirits has probably reached the limit beyond which they cannot be increased with advantage to the revenue. The late Chan- cellor of the Exchequer has told us that new sources of income must be found. Expenditure on Imperial purposes is growing rapidly ; while for the solution of social problems fresh demands are being constantly made on the public purse. While colonies are in their infancy their whole resources are needed for their internal develop- ment, and it is the duty of the Mother Country to charge herself with their defence. But our Colonies have now become important self-govern- ing communities, and it appears only reasonable that the Colonial taxpayer should stand shoulder to shoulder with the taxpayer of the Mother Country, and assume his share of the responsibility for the common defence of the Empire. The more I have studied this question — and from the time when I first discussed it with Mr. Hofmeyr at the Cape in 1887, I think I may claim, without PREFERENTIAL TARIFFS 139 giving offence, that few people have had greater opportunities for studying it in all parts of the Empire than myself — the more have I become con- vinced that the only possible method of securing an adequate contribution to the defence of the Empire from its colonies and dependencies is through some form of commercial federation. 2. Closely connected with the defence of the Empire is the question of our food supply in time of war, to inquire into which a Royal Com- mission has recently been appointed. In 1901 our total imports of wheat, wheat-meal, and flour were equivalent to 101,000,000 cwt. of v/heat, while we grew 28,500,000 cwt. in the United Kingdom. Of the quantity imported, the United States sent us no less than 66,800,000 cwt., while 19,500,000 cwt. came from British possessions. We are thus dependent on the United States for one-half of the wheat we require for home consumption. A powerful navy may give us command of the sea, but in the event of war with the United States, the command of the sea would not ensure the maintenance of our food supply. The United States government by prohibiting the export of wheat to the United Kingdom — and such a prohibition, if the American people were with their government in the cause of dispute, would assuredly be effective — could compel us to submit to whatever terms it chose to dictate. Though a war between the two great branches of the English-speaking 140 PROBLEMS OP EMPIRE race is year by year becoming a more remote contingency, and though leading men on both sides of the Atlantic are looking forward to a time when the relations of the two peoples will become closer than they are now, it cannot be forgotten that at the present time we are absolutely at the mercy of the United States, because the quantity of wheat we draw from her is so large that it could not be made good at once from any other source. Such a position is not satisfactory for a great empire. Since the failure of the Colonial Conference to adopt any arrangement as regards preferential trade, some of the strongest Imperialists in Canada have urged the refusal of any Canadian contribution to Imperial defence (Canada alone of the Colonies has done nothing) until the British people put their food supply on a secure basis. They say, and they say with some justice, ' It is idle for us to contri- bute to the maintenance of the Imperial Navy when Britain would be forced to make peace within a few weeks of the outbreak of war from fear of starvation.' To render our food supply in time of war reasonably secure, to enable the British people to enter into an alliance with the American people on equal terms, it is essential that we should not be dependent for our food on any foreign country to such an extent as to render it impossible to make good from other sources the supplies which we draw from that country. PREFERENTIAL TARIFFS 141 From this point of view the larger the amount of foodstuffs we can produce under the British flag, and preferably in the United Kingdom, the greater the equanimity with which we can face the possibility of war. 3. ' In the decline of agriculture/ said Bis- marck, ' I see the greatest danger to our per- manence as a race.' Conservatives naturally wish to prevent the policy outlined by Mr. Chamberlain from being represented as protection to a particular industry. But it is on the agri- cultural industry that the strength of the nation to a great extent depends ; for it is from the agricultural population that the best fighting material, whether for the Army or Navy, is drawn, and that the urban population is recruited. The fall in the value of agricultural produce, the large conversions of arable land into pasture, the throwing of land out of cultivation, and the consequent diminution in the demand for agri- cultural labour, have driven workmen from the country into the towns in search of employment, competing with the labour already there, and aggravating all the difficulties of the housing problem with which the social reformer is en- deavouring to grapple. There is only too much reason for believing that the decline in the agri- cultural population and the yearly increasing proportion of children bred and brought up under the unhealthy conditions of town life is having its effects on the stamina of the race. Although 142 PROBLEMS OF EMPIRE the standard for the Army has been reduced to that of a well-grown girl of i6, in Manchester, in 1899, 8000 out of 11,000 men who presented themselves for service had to be rejected as physically unfit, while for the three years 1899, 1900, 1901, the percentage fit for service was only 28 per cent. Recent census statistics show that the increase of the population has been checked, while the average family in London is said in three generations to become extinct. If the race in the Mother Country is physically degenerating and becoming unable to reproduce itself, the decline in the agricultural population has become a most serious national question ; and I believe that Mr. Chamberlain's policy ought to be considered, and that the people of this country will be prepared to consider it from this as well as from other points of view. I say this because, whenever I have aUuded to the subject at the immense number of Liberal meetings which I have addressed in the last three years in the great centres of population in England and Scotland, its importance has been appreciated by my audiences, which have been mainly composed of working men. 4. The future of British manufacturing in- dustries is as important as that of agriculture ; and the fact that during the last ten years of the nineteenth century the imports into the United Kingdom increased by over 100 millions sterling per annum, whereas the exports of PREFERENTIAL TARIFFS 148 British produce, apart from the increased value of coal, remained practically stationary, does not indicate a satisfactory condition. That the British manufacturer is being beaten, even in the home market, by goods produced in highly protected countries, is attributed to the superior efficiency of the workshop management and the labour of his competitors ; but it is also a proof that Free Trade is not essential to cheapness of production. Even were the management and the labour as efficient in British workshops as it is represented to be in the United States, it is doubtful whether the British manufacturer could hold his own. The American manufacturer (and the same remark applies to a lesser extent to the German manufacturer) possesses an enor- mous home market protected by duties well- nigh prohibitive, and through the formation of Trust companies, with their huge aggregations of capital under single control, is able to make an enormous profit on goods sold in the home market. In order to spread the general charges of his business and thus increase the profits on the goods sold at home, he sells his surplus abroad at a price, not perhaps below the cost of manufacture, but below the cost of pro- duction if the goods sold abroad were debited with their full proportion of general charges. I believe that it will become increasingly difficult for the British manufacturer to hold his own under present conditions, and that Mr. Balfour's 144 PROBLEMS OF EMPIRE warning in the House of Commons was amply justified by the circumstances. 5. Lastly, Mr. Chamberlain's proposals ought to be considered from the point of view of Ireland. During the seventeenth and eighteenth centuries the fiscal policy of the United Kingdom was regulated solely in the interests of the people of Great Britain. Irish industries were crushed by restrictive enactments imposed by the British Parliament in the interest of the British manu- facturer, while Irishmen were excluded from trading with the Colonies, in the interest of the British merchant. When Lord North and Mr. Pitt endeavoured to remove the restrictions under which Irish industry and Irish commerce laboured, they were met by a tremendous out- cry from Lancashire and some of the principal commercial centres of Great Britain, an outcry which is characterised by the eminent historian, Mr. Lecky, as an ' ebullition of intense commercial selfishness.' If we bear in mind that, while during the era of Free Trade there has been an enormous increase in the commercial prosperity and the material well-being of the people of Great Britain, the population of Ireland has diminished to nearly one-half, it is difficult to avoid the conclusion that the British fiscal policy of the nineteenth century has been as selfish and as detrimental to Ireland as was the policy of the centuries which preceded it. On this point the opinion of Mr. Childers, a Liberal statesman PREFERENTIAL TARIFFS 145 and Chairman of the Royal Commission on the Financial Relations between Great Britain and Ireland at the time of his death, is entitled to the greatest respect. In clause 91 of his draft report he says : — ' Ireland, being a country mainly inhabited by agricultural producers, could support its present population upon the corn and meat produced there without having recourse, under ordinary circumstances, to a foreign supply of those articles, and could at the same time export a surplus of these foodstuffs. The population of Ireland consumes a rather large amount, in proportion to its wealth, of spirits, tea, and tobacco. This being so, it does not appear that a fiscal system which raises no revenue from foreign foodstuffs, but does raise a rather large revenue from spirits, tea, and tobacco, is advantageous to the population of Ireland, although it may be advantageous to the population of the United Kingdom, looked at as a whole. It may even, perhaps, be said that just as Ireland suffered in the last century from the protective and exclusive commercial policy of Great Britain, so she has been at a disadvantage in this century from the adoption of an almost unqualified Free-Trade policy for the United Kingdom.' The above, sir, are some of the reasons why I believe our fiscal policy should be reconsidered. The principles of Free Trade, as conceived and as enunciated by Cobden, may be admitted to 146 PROBLEMS OF EMPIRE be sound ; but blind adherence to a travesty of those principles without regard to altered conditions may imperil, not only the unity of the Empire, but our very existence as a nation. Mr. Chamberlain is entitled to the respect of even his political opponents for his courage in raising the question, and both he and Mr. Balfour appear to me to deserve the thanks of every Englishman for the manner in which they have placed it before the country. Your obedient servant, T. A. Brassey. CANADA AND IMPERIAL PREFERENCE (Speech to the Canadian Manufacturers' Association, Toronto, September i6, 1903) I HOPE that the members of the Canadian Manu- facturers' Association will not judge me too harshly if I discuss the Imperial Trade question from the British rather than the Canadian stand- point, and that I may be allowed to make a few preliminary remarks on the subject of Imperial Federation. It is sixteen years ago since I first became associated with Dr. Parkin in the advocacy of Imperial Federation. After travelling through the length and breadth of the British Empire, I came to the conclusion that the Empire could only remain united by the recognition of two principles — first, that every part of the Empire has a right to manage its own internal affairs ; and, second, that each part has the right to a voice in the control of Imperial expenditure and Imperial policy, subject to the condition that it bears its fair share of Imperial burdens. For some years I have thought that the burden of defending the Empire was becoming too heavy 1 2 148 PROBLEMS OF EMPIRE for the taxpayers of the Mother Country alone. Russia, Germany, France, and the United States — rival nations — have all been bending their efforts to build up their naval strength. England must keep pace with them, or lose the command of the sea. To provide funds for the increase of the Navy, additional taxation has been imposed. The estate duties, for instance, imposed by Sir William Harcourt, press very heavily on a particular class. Many people have been taxed out of their homes. The maintenance of the British Navy is of the greatest importance to Canada ; for if the command of the sea be lost she could not, in time of war, send her 125,000,000 dollars' worth of exports to the Mother Country. Is it not fair, then, that she should contribute to its support ? We in the Mother Country do not expect Canada, however, to contribute to the support of the Navy till she is given a voice in the control of Imperial affairs. To provide for colonial representation under our present con- stitutional arrangements is very difficult, if not impossible. While every Canadian is subject to three legislatures — the Provincial Parliament, the Dominion Parliament, and the Imperial Parlia- ment (in which at present he is not represented), we in the Old Country have only one Parliament to deal with the business of the Empire, questions affecting the United Kingdom as a whole — such as would be dealt with in Canada by the Dominion Parliament — and the special interests of England, CANADA-IMPERIAL PREFERENCE 149 Wales, Scotland, and Ireland, which here would be under the control of your Provincial Parlia- ments. It is admitted on all hands that parlia- mentary government is breaking down beneath the load. Our task, therefore, is to rid the Imperial Parliament of all local business by the establishment of subordinate legislatures in the several countries of the United Kingdom, and when that is done, the way will be clear for colonial representation. Other parts of the Empire, too, have each their particular task to perform before they will be in a position to consider any practical proposal for Imperial Federation. Australia has to get her Federal Constitution into working order, and South Africa has to federate her own provinces. Meanwhile you Canadians, who already possess a Federal Con- stitution such as I desire to see established in the United Kingdom, can devote your efforts to building up your own country. To turn to the question in which we are more immediately interested, the policy put before the country by Mr. Chamberlain. This question may be regarded from two aspects. In the first place, there is the standpoint of retaliation — or, in other words, the necessity of preventing Great Britain from becoming the dumping-ground for American and German manu- factures. I do not think there will be much dispute as to the necessity of taking steps to meet this evil. Secondly, there is the question 150 PROBLEMS OF EMPIRE of preferential trade within the Empire, and here I get on more difficult ground. It would, of course, be idle to discuss any scheme for an Imperial preferential tariff unless the people of the Old Country are prepared to put a tax on foreign wheat and meat, for the benefit of Canadian and Australian producers. Mr. Chamberlain's policy aims to do this, and at the same time not to increase the cost of living to the people. He proposes to substitute for taxes on commodities which the Old Country cannot produce — such as tea, coffee, &c. — taxes on wheat and other agricultural products which she can herself raise. The result, he believes, will be an equal amount of revenue without increasing the burden on the consumer. One effect of Mr. Chamberlain's policy will be to divert the stream of emigration into the Colonies from the United States or the Argentine Republic. What, Mr. Ross,^ would have been the popula- tion of Canada to-day if that policy had been inaugurated twenty years ago ? Mr. Ross : Twenty millions. Mr. Brassey : Yes, sir, I believe you are right. Will not your population increase much faster in the next ten years if this policy is adopted than if it is not ? I come now to the thorny part of my subject. If this policy is to be carried through, we who are advocating it at home will have to give a ^ Premier of Ontario. CANADA-IMPERIAL PREFERENCE 151 good answer to those who will ask us : What are the Colonies going to give in return for the benefits they receive from the imposition of the tax on foodstuffs ? Two answers can be given. The first is contained in a resolution, introduced by Mr. George E. Drummond at the Congress of Chambers of Commerce at Montreal/ to the effect that it was the duty of the Colonies to participate in the defence of the Empire. I ask those Canadians who are clamouring for us to send you our capital and the best of our workpeople for the develop- ment of Canadian industries to remember that, if the Colonial and British taxpayers stood shoulder to shoulder, sharing the burdens of Imperial defence, it would not matter, from an Imperial point of view, where a cotton mill existed, whether in Toronto or Manchester. But as long as nearly the whole burden falls on the profits of the British miU, it is not to the interest of the British tax- payer that the miU in Manchester should be closed by the establishment of the miU in Toronto. For the reason already given we cannot now expect the Colonies to make any substantial direct contribution in money to the defence of the Empire. The second answer to the question is that the Colonies are prepared to give an effective preference in their own markets to the products of the Mother Country. To-night your Premier, 1 The Congress of Chambers of Commerce of the Empire, presided over by Lord Brassey, was held in August 1903. 152 PROBLEMS OF EMPIRE Mr. Ross, spoke of the desire that the sentiment in favour of the ' Made in Canada ' poHcy should prevail, and that it should be your ambition to supply the wants of the Canadian market. Here is where the difficulty lies. Now, if this is the desire of the Canadian manufacturers, and the Canadian government should wish to carry out that desire at the. expense of the manufacturer in the Mother Country, then, in my opinion, there is no basis for a policy of preferential trade within the Empire. The justification for a tax on food- stuffs is that the Colonies will take a larger pro- portion than they do now of British products. You import at present from the United States and other countries ;^i8,ooo,ooo worth of goods : £18,000,000 is not a very large amount in a total export trade of ;^35o,ooo,ooo Unless the Mother Country is able to secure a large portion of the trade you now carry on with foreign coun- tries, as well as supply to a considerable extent the needs of the great population which is bound to be created by the adoption of an Imperial preference, there is really no solid answer to the question, ' What will the Colonies do in return ? ' This view and the view of the Canadian manufacturers may appear to be diametrically opposed. I believe, however, that a solution will be arrived at as a result of mutual concessions and the free interchange of opinions. Nothing CANADA-IMPERIAL PREFERENCE 153 has struck me more forcibly in my tour through Canada than the friendly feeling towards the Mother Country. Sentiment, however, is not everything. A large number of people are pour- ing into the North-West who are not of British origin. They are satisfied with Canadian insti- tutions, but there is no reason why they should be loyal to the British connection. It is vital to the future unity of the Empire that these farmers should realise that there is a material benefit from living under the British flag, and this is only to be brought about by such a policy as Mr. Chamberlain's. My remarks may not meet with the approval of many here, but I offer them for your serious consideration. I believe that the unity of the Empire will be preserved, and Mr. Chamberlain's policy can be carried out by a free and honest exchange of opinion between the Mother Country and the Colonies. No one who has travelled as I have through Canada this fall can go home with any other conviction than that the pros- pects of Canadian development are sufficient to afford room for both the Canadian and British manufacturers. EMPIRE PROBLEMS (Address delivered at the Union Club, Johannesburg, February i, 1910) Reprinted from the Star The few remarks which I made last week have led to the invitation to address you to-night. Let me preface what I have to say- by explaining that my political faith was inspired during my Oxford days by the speeches which Lord Rosebery delivered in the early eighties on Imperial Federation. In a speech at Paisley in 1884, he described Imperial Federation as a cause for which any man might be content to live, or, if needs be, to die. Fifteen years after those words were spoken, tens of thousands laid down their lives for that cause on South African soil. While stUl at Oxford I made up my mind that it was the business of anyone who aspired to a political career in the Old Country to visit the Colonies and Dependencies, and to acquire some knowledge of them at first hand. For sixteen months after I left Oxford I travelled through Greater Britain, mainly in the Sunbeam. We visited India, Ceylon, Straits Settlements, EMPIRE PROBLEMS 155 Borneo ; circumnavigated Australia, touched at Mauritius, spent a week or two in South Africa — caUing at St. Helena, Ascension, and Sierra Leone on the way home. That voyage, which is described in my mother's last book, published after her death, covered 37,000 miles and occupied thirteen months ; and, of all the ports at which the Sunbeam touched, only four were outside the British Empire. There could be no better illustration of the magnitude and diversified character of the problem with which the rulers of the British Empire have to deal. I returned from that voyage convinced that the permanent unity of the British Empire rested on the recognition of two main principles : — (i) That every part of the Empire capable of self-government had a right to manage its own internal affairs in its own way. (2) That every part of the Empire which bears its fair share of Imperial burdens has a right to a voice in the control of Imperial policy and Imperial expenditure. The old Imperial Federation League, which was founded under the auspices of the late Mr. W. E. Forster, and of which Lord Rosebery and the late Mr. Stanhope were successively presi- dents, carried on an active campaign during the late eighties and early nineties, not only in the United Kingdom but in the Oversea Dominions, advocating the second of the principles just mentioned. Of that campaign, my old friend, 156 PROBLEMS OF EMPIRE Dr. G. R. Parkin, now director of the Rhodes Scholarships, bore the brunt, and to him more than any one else is due the dispelling of the ignorance and indifference of the press and public opinion in the Old Country to the affairs of Greater Britain. The Imperial Federation League sent deputations from time to time to the Prime Minister, notably to Lord Salisbury. Their arguments were always met with the challenge to produce a plan. Committees were appointed to devise a scheme for realising the object which the members of the Imperial Federa- tion League had at heart, but agreement was found to be impossible amongst politicians drawn from both political parties. The Imperial Federation League was dissolved. It had created the senti- ment of Imperial unity. It could do no more. Its successor is the British Empire League, which owes its influential membership to the fact that it limits itself to organising banquets on the occasion of Imperial conferences, and to passing resolutions on non-controversial subjects, such as Imperial communications, and because it never attempts to come to close grips with the real problems of Empire, which are involved in the two principles laid down. Principles of Imperial Government The first of these principles, the right of self- government, is universally recognised as far as the outlying dominions are concerned. The EMPIRE PROBLEMS 157 second principle involves two things : (i) The creation of an Imperial council, or Imperial parliament, in which all parts of the Empire which bear their share of Imperial burdens shall be represented ; (2) the provision of a revenue for Imperial defence, to which all parts of the Empire shall contribute. The fiscal side of the problem I will deal with later on. Let us first consider the constitutional side of the problem. Various suggestions have been made for the outlying dominions taking their part in the councils of the Empire by the addition of repre- sentatives from them to the Privy Council, to the House of Lords, or even, on the French plan, to the House of Commons. All have been set aside for one reason or the other. The conclusion appears to me inevitable that the Imperial council or Imperial parliament, or whatever it may be called, cannot be evolved out of any existing institution. While I hold now as strongly as I did twenty years ago that the establishment of an Imperial council is essential to the continued unity of the British Empire, the time has not yet arrived when this can be done. There are many, both in the Colonies and the Mother Country, who believe that things can go on as they are without any formal tie. The claim of Canada to a voice in the foreign policy which immediately affects her, but which may involve the whole Empire, is against this view. I will suggest an illustration of the need for an Imperial 158 PROBLEMS OF EMPIRE council which will appeal to you more directly. If an Imperial council with Colonial (including South African) representatives had been in existence fifteen or even twelve years ago, it is my firm conviction that the war which carried such untold suffering to the people of South Africa (British and Dutch) would not have taken place. On the one hand, many of the misunder- standings at the time which led to the war would have been avoided by the presence in the Imperial Councils of South African representatives. On the other hand, I do not believe that the govern- ment of President Kruger would have resisted a reasonable demand on behalf of the Britishers in the Transvaal, put forward by a council or parliament in which all parts of the Empire were represented. They certainly could not have relied, as they were justified in doing, from their experience in 1880-1, on the possible reversal of policy through a change of government in the United Kingdom. Continuity of Policy You could have no better illustration than this of the danger to which the Empire is exposed under our present system of Imperial government, and to which I alluded last week — the danger arising from the fact that there can be no assured continuity in Imperial policy so long as Imperial questions and domestic questions are submitted to the constituents of what is at present the EMPIRE PROBLEMS 159 Imperial Parliament in the same confused issue. I said just now that the time had not yet arrived for the establishment of an Imperial council. I have always held that certain preliminary steps were necessary before we could begin to discuss the possibility of putting the crown on the Imperial edifice. The Pillars of Empire My conception of the Imperial structure has always been that it should rest on four piUars, or four federations, in the four self-governing portions of the Empire : Canada, Australia, South Africa, and the United Kingdom. Twenty years ago only one of these pillars was complete — the Canadian Federation. Twelve years ago after a very long struggle, the second pUlar — the Australian Commonwealth — was set up. Only last year, you here in South Africa settled the lines on which the third pUlar was to be con- structed ; and there are some years of critical work before South African statesmen of both races — years such as those through which the statesmen of Australia have passed — before the mortar in your pillar is sufficiently set to make it a solid foundation for what is to come after. As in the case of Australia, it has taken years of effort of leading statesmen to arrive at the present results. Not the least interesting feature in one of the most interesting days of my life (which included a visit to the harbour works at Durban, a talk 160 PROBLEMS OF EMPIRE with Sir David Hunter on Natal railways, an hour with Sir John Robinson, the first Premier of Natal, a square talk with his successor, Mr. Escombe, who by his eloquence made so marked an impression on the Colonial Conference of 1897, my first acquaintance with Major Karri Davis, who was then full of the raising of the Imperial Light Horse, and a half-hour with Sir Penn Symons, who was mortally wounded within less than a month at Talana Hill) was the fact that Mr. Escombe gave me to read in the train on the journey back from Durban to Maritzburg a draft copy of the Australian Commonwealth Constitution, with his own pencil notes in the margin adapting it to South African conditions. The I.L.H. The I.L.H. deserves a more than passing reference in Johannesburg. Every officer, I be- lieve, with one exception, of the ist Imperial Light Horse was either kiUed or wounded. No finer corps ever fought in the British service. Of those who fell, may not we say, in the words of Lindsay Gordon — Let never a tear their memory stain, Give their memory never a sigh. Some of many who perished not in vain As a type of our chivalry — the chivalry of the once-despised money-grubbers of the Rand? If the future of this country is now so full of hope, if South Africans — of Dutch EMPIRE PROBLEMS 161 or British race — can now respect one another, never forget the debt you owe to the officers and men of the I.L.H. The Outlying Pillars To resume the thread of our discussion : Canada, Austraha, and South Africa have all been federated on different lines. The Canadian Federation was formed by the creation of the provincial legislatures of Ontario and Quebec — rounds which other provinces have gradually grouped themselves. Under the Canadian Con- stitution the powers of the provincial legislatures are defined ; all the reserve of power rests with the Dominion government. The Australian Feder- ation was formed by the surrender of power to the Commonwealth government by colonial legis- latures which had long been independent. It is only by degrees and after a hard struggle that the Commonwealth government is acquiring the power that it is desirable, in the interests of Australia, it should possess. Here in South Africa you have gone in for closer union than in the case of Canada. The Union Parliament is omnipotent. The powers of the provincial councils are small, and, as time goes on, they will probably have to be increased. At the present stage, and with a white population of about 1,250,000 persons, the form which your statesmen have decided that the Union govern- ment should take is, I believe, sound. 162 PROBLEMS OF EMPIRE The Mother Country As far as the outlying portions of the Empire are concerned, the pUlars of the Imperial structure are built. The obstacle to any further advance towards Imperial Unity is in the Mother Country, and it is for her to set her house in order before any further advance can be made. The Mother Country contains over 43 millions of people ; Canada contains about six, and Australia about four millions. Every Canadian for the past forty years, every Australian for the past eleven years, has lived as every South African henceforward wiU live, under three parliaments or councils, each dealing with a distinct class of business. We in the Old Country are attempting to deal in a single legislature with three distinct classes of business : (i) The internal affairs of England, Scotland, and Ireland, which in Canada would be dealt with by the provincial parliaments of Ontario and Quebec, and in Australia by the colonial parliaments of Victoria and New South Wales. (2) Questions affecting the United Kingdom as a whole, which would be dealt with in Canada by the Dominion Parliament and in Australia by the Commonwealth Parliament. (3) The government of the greatest Empire the world has ever seen, including within its borders nearly a quarter of the human race. EMPIRE PROBLEMS 163 It is not astonishing that the attempt has broken down. The business of the country is only carried on at aU by the most drastic use of the closure, which prevents adequate discussion. Ill-considered measures are forced through the House of Commons at the will of the Govern- ment of the day, and were it not for the revision which they receive at the hands of the House of Lords, many would be unworkable. It is not too much to say that the House of Commons has degenerated into a body for registering the decrees of the Cabinet, and has become one of the worst legislative machines in the world — simply because it has too much to do. The congestion of business in Parliament has been lamented by statesman after statesman, from Mr. Gladstone onwards. Statesman after states- man has indicated the remedy — notably the present Prime Minister and his predecessor ; but now attention is being concentrated on the reform of the House of Lords. The reform of the House of Lords would have no appreciable influence on the progress of public business. The House of Lords never set themselves in opposition to the clearly expressed wishes of the people. The recent election has amply justified their action in referring the Budget to the country. In those constituencies which are susceptible to the influence of public opinion — and the vast majority of constituencies in Scot- land, Ireland, and Wales are not — there has been 164 PROBLEMS OF EMPIRE an immense turnover. In England there is a majority against the Government, which is now dependent on Irish, Scotch, and Welsh votes. The result of the election is much as I expected. It will, I hope, lead to the so-called Unionist party dropping some of their prejudices and seriously considering the remedy which I have devoted the best part of my political life to advocating. That remedy consists in handing over to Subordinate Legislatures in England, Scotland, Ireland, and Wales the management of their internal affairs. It would take too long to give all the arguments in favour of the proposal, or to discuss the objections to it. Two or three observations may, however, be made : — (i) It has been found absolutely impossible to devise a satisfactory measure of self- government for Ireland alone. {2) The Unionist objection that all countries of the United Kingdom are subject to simUar legislation, and that, therefore, none has any grievance, has no founda- tion in fact. The several countries are dealt with on different lines and in separate Acts of Parliament at present, involving an immense waste of time for the repre- sentatives of the countries not immediately concerned. The passing of three separate EMPIRE PROBLEMS 165 enactments in different years for the establishment of county government in England, Scotland, and Ireland, is a conspicuous instance in point. (3) The objection of the English Unionist to the proposal will, I believe, be removed now that he sees the danger of measures being imposed on England (for instance, the disestablishment of the Church) by the votes of Scotchmen, Irishmen, and Welshmen. When and not until a federal form of govern- ment has been established in the United Kingdom, and the Mother Country has put her internal government on similar lines to those of Canada, Austraha, and South Africa, will it be possible to consider the form which the supreme governing authority of the Empire is to take. It is inconceivable that the responsibility for the government of the Empire can remain in- definitely with the people of the Mother Country. The Colonies have grown into Dominions ; they are no longer children, and as they grow in population and wealth they will demand, and indeed they are already in some cases demanding, a voice in the councils of the Empire. Assuming an Imperial Parliament were established to-day, Canada would have a larger voice in that Parlia- ment than Scotland, Australia a voice equal to that of Ireland, and South Africa a voice equal to that of Wales. But if the Oversea Dominions 166 PROBLEMS OF EMPIRE are to have a voice in the councils of the Empire, they must also share in the responsibilities of Empire — in other words, in the burden of defence. Imperial Defence For over twenty years I have studied the question of Imperial defence. I have been in every coaling station in the Empire, excepting Hong Kong, Bermuda, and New Zealand, and for twenty years it has been my business to review in the ' Naval Annual ' the progress of the navies of the world. Twenty years ago there was only one navy that could in any way be compared with ours — the French Navy. Now the ex- penditure on new construction in Germany exceeds that available for the same purpose in the British estimates, while that of the United States is not far short of our own. The command of the sea is absolutely vital to the continued existence of the British Empire. Are the resources of the United Kingdom equal to maintaining it ? I do not think so. I believe that the burden of defending the Empire is rapidly becoming too heavy for the taxpayers of the United Kingdom alone — -and of that the taxation proposed in the Budget is the proof. The most oppressive feature of the Budget proposals is the heavy increase in the estate duties. The estate duties imposed some years ago by Sir William Harcourt were recognised by him — as we know on the authority of Lord Milner, who was then the Chairman of EMPIRE PROBLEMS 167 the Board of Inland Revenue — to be placed at their extreme limit. Many people, and amongst them some of my own friends and relatives, have been taxed by them out of their homes. The heavy increase in estate duties will tax many more out of their homes (you have no more oppressive taxation than that which says to a man, ' You shall no longer live in the home which you and your forefathers have inhabited '), and is tantamount to confiscation. The general effect of the Budget has been to shake public confidence in the security of property in the United Kingdom. It has already, I know, led to the transfer of large amounts of capital from British to Colonial and foreign securities, to people opening banking accounts abroad, and it will most certainly tend to increase the number of unemployed. I have said enough to justify my contention that the burden of Imperial defence is becoming too heavy for the Mother Country alone, and we must appeal to the Oversea Dominions to help. The defence of the Empire comes under two heads : the Naval and the Military. I have always held that the miUtary forces of the Empire must remain under the control of their respective governments. Much has been done by the creating of an Imperial military staff, and in other ways, to render the various forces more fit for co-operation should the necessity ever arise. The naval defence of the Empire must, if it is to be 168 PROBLEMS OF EMPIRE efficient, be under one undivided control ; and I look upon the decision of the last Imperial Conference to create local navies in Australia and Canada as in some respects a retrograde step. When I was in Australia in 1887, the various colonies each had their petty local navies. They Were given up as practically valueless. For a time, under the influence of Sir John Forrest, wiser counsels prevailed, and something sub- stantial was done under arrangements with the Admiralty for the defence of Australia and the Empire. I gladly admit that provision has been made for minimising the evils of local control in the case of the naval forces which Canada and Australia are creating ; but I believe most firmly that the attitude of New Zealand and of South Africa as regards naval forces is the sound one, and I profoundly regret the refusal of the British government to accept the spontaneous and un- conditional offer of battleships last spring by New Zealand and Australia. They were just what was needed at the moment, though I fully recognise that we cannot expect a substantial con- tribution to the naval defence of the Empire until we are in a position to give the Oversea Dominions a voice in the control of Imperial expenditure and Imperial policy. Sir Wilfrid Laurier's position is unassailable. ' If our future military contribution were ever to be considered compulsory, I would say to the Mother Country, " If you want us to EMPIRE PROBLEMS 169 help you must call us to your councils." ' The Mother Country, as I have pointed out, has to set her own house in order before she is in a position to do that. The Cape Squadron One word must be said in this connection of special importance to South Africa. The squadron on the Cape station is now cut down below the limit of safety. I think I shall not be far wrong if I say that the value of the cargoes leaving Cape ports for the Mother Country every week does not fall short of one million sterling. Cargoes of that enormous value, in my Judgment, are not adequately protected by the force now main- tained on the Cape station. I hope that your Union government, as soon as it gets on its legs, will press that the naval forces maintained on the Cape station be strengthened, and I hope also they will say that they are prepared to pay a certain proportion of the cost. Imperial Preference Are the Oversea Dominions prepared to bear their fair share of Imperial burdens ? I do not think so, and I doubt if substantial Imperial revenue will ever be provided by the voting of direct contributions to a common fund. In October 1887 I spent a long day with my friend, the late Mr. Hofmeyr, discussing this very question. He had just returned from the first Colonial 170 PROBLEMS OF EMPIRE Conference, at which he had made the following proposal : ' Every part of the Empire, whatever its tariff might be, to impose a tax or surtax of 5 per cent, on non-Imperial goods — the proceeds of that tax to be paid into a common fund for the maintenance of the Imperial Navy.' Australia or Canada or South Africa might be protectionist ; the Mother Country might adhere to the policy of so-called Free Trade — but every part of the Empire, whatever its policy might be, should be bound by agreement to impose the 5 per cent, extra duty on non-Imperial goods. I have always maintained that it is on the hnes proposed by Mr. Hofmeyr that a revenue for Imperial purposes can most easily be raised, and this is one of the strongest arguments with me in favour of Tariff Reform and Imperial Preference. Tariff Reform I have been asked to say a few words on this branch of my subject, although I have already kept you long enough. The vital point to bear in mind, especially for you who live in the Oversea Dominions, is that Imperial preference involves, as far as the Mother Country is con- cerned, the imposition of a tax on foodstuffs. Without such a tax the policy will be of no value to the Colonies. No Tariff Reformer is so sense- less as to suggest the imposition of a tax on the raw materials of any manufacture — though the EMPIRE PROBLEMS 171 suggestion that this might be done has without doubt had a considerable influence in the cotton and woollen manufacturing districts which are the main support in England of the Government. The two main principles on which Tariff Reform should proceed are : first, that small duties should be levied on articles of general consumption, such as corn, which would produce a considerable revenue in the aggregate ; and, second, that produce imported from other parts of the Empire should be admitted, not free, but on preferen- tial terms. Of the main arguments in favour of Tariff Reform, the first was the need for additional revenue whether for Imperial defence or for social reform. The second lay in the enormous numbers of people who remained in a chronic state of unemployment in the United Kingdom largely owing to the decline of the agricul- tural population. In the decline of agriculture. Prince Bismarck had said, ' I see the greatest danger to our permanence as a race.' If that was true of Germany, it was also true of the United Kingdom. During the last fifty or sixty years the number of men earning their living on the land had diminished to approximately one-half of its former strength. The population of Ireland had diminished by one-half in the same period. And the third great argument for Tariff Reform was the prospect of building up the Empire through a system of Imperial 172 PROBLEMS OF EMPIRE preference. It was idle for the Old Country to expect that preference would be continued by the Dominions indefinitely if nothing were done to reciprocate it. A preference given to colonial produce in the United Kingdom would divert the stream of emigration from foreign countries to Canada. The speaker recalled a visit to Canada in 1903, during which he had found abundant testimony to the benefits which Imperial preference would bring to the Dominion. On that occasion, too, he had visited the North- West Territories in order to discover for himself what would be an effective preference for Canadian wheat against their American rivals, and he had come to the conclusion that one shilling would be ample to enable them to hold their own. The farmers of South Africa were directly inter- ested in this question as future exporters of maize, wine, and tobacco. The Conclusions This [concluded Mr. Brassey] is but a hasty review of the fiscal side of my subject. But I have already detained you too long. I have endeavoured to make clear my view that the constitutional structure of this Empire must rest on four great Federations, and that the representatives of those Federations must, if the Empire is to remain united, discuss at no distant date the form which the supreme governing authority is to take. That authority, by the way, must include EMPIRE PROBLEMS 173 representatives of New Zealand and Newfound- land, as well as of India and the Crown Colonies and Dependencies. I have also tried to show you how, through Imperial preference, the revenue for Imperial defence can be provided and the prosperity of all living under the British flag increased. Twenty years ago, when I first began to discuss these questions, I thought that unless Imperial Federation was almost at once brought about the Empire would fall to pieces. I do not think so to-day. We have been advancing by gradual steps to the desired end, and the great obstacle to any further advance is the pre- judices of parties in the Old Country. Party prejudice prevents Liberals from considering any modification of our present fiscal policy, however far it may be removed from protection. Party prejudice prevents Unionists from considering any modification of the constitution of the United Kingdom, however far removed it may be from the Home Rule proposals of Mr. Gladstone. I shall be content if I have made you realise with me that the great danger to the Empire to-day arises from the fact that Imperial questions and domestic questions are submitted to the electors of the United Kingdom in one confused issue. 174 PROBLEMS OF EMPIRE THE BIG PROBLEMS (Leading Article in the Star, Johannesburg, February 2, 1910) A LARGE and intensely appreciative gathering at the Union Club bore witness last night to the real interest which exists in this place in the big problems of the British Empire. These are subjects, as we pointed out the other day, on which Mr. Brassey has long estab- lished a claim to be heard. His working life has all been devoted to their study. To his settled convictions on the true lines of Imperial policy he has deliberately sacrificed the political career which his ability and fortune opened to him in England. Neither party has room under present conditions for a man who is both Home Ruler and Imperialist, and the one because he is the other. Perhaps the truth is that he is widely divided from the bulk of politicians in both parties by the paramount importance which he attaches to these great Imperial questions, by comparison with the purely domestic quarrels which occupy nine-tenths of the time of the so-called Imperial Parliament. That is the reason why the people of this and other British countries oversea are his best audience while things remain as they are in England. Mr. Brassey's main interest in English politics is in the questions which affect Canadians, South Africans, and Australians just as closely as EngUshmen, and Englishmen are at present the least prepared of the four to take them seriously. The reason, as Mr. Brassey points out, is largely constitutional. Within the last few years the three great dominions have devised for themselves a system of self-government which is identical in its broad features, which disposes scientifically of public business by a division of labour between central and provincial councils, and which is adapted to the creation hereafter of some form of higher council to deal with matters common to them all. On the other hand, the Mother Country, EMPIRE PROBLEMS 175 which brought the dominions into being, has fallen altogether behind in the process of Imperial evolution. In Great Britain a single Parliament is still expected to deal with questions peculiar to Ireland or Wales, with questions affecting the whole of the British Isles, and with questions affecting the Empire at large. The result, as everyone admits, is congestion of business, slipshod administration, and a growing tendency to convert the Mother of Pariiaments into a mere machine for registering the decrees of the Cabinet of the day. And the remedy ? Mr. Brassey's remedy, at all events, has the merit of being perfectly logical and easily under- stood of a South African audience. He believes that the next stage in Imperial development must be the reform and decentralisation of government in the British Isles themselves. THE CRISIS AND THE WAY OUT^ (April 19 lo) The present political situation is deplored on all hands. The finances of the country are in con- fusion ; legislation is at a standstill, and the time of both Houses of Parliament has been occupied with unreal and more or less futile discussions of remedies which do not cut at the root of the evil. Another general election, which neither side wants, is in prospect at no distant date. The result cannot materially alter the strength of parties in the House of Commons. The policy on which the present Government will appeal to the country comprises the destruc- tion, whether directly or indirectly, of the House of Lords and Home Rule for Ireland. On this policy, to which the Conservative party offer no adequate alternative, the following criticisms may be made. It has been found impossible to devise a measure of Home Rule for Ireland only, which gets over the difficulty as to the position of the Irish members in the Imperial Parliament. 1 The above was written as an Introduction to the Johannesburg address, which was published as a pamphlet in April 1910. THE CRISIS AND THE WAY OUT 177 In the Bills of 1886 and 1893, three different plans were proposed — total exclusion, the in- and-out plan, and inclusion for all purposes. All were open to fatal objections, and when the appeal to the country was made the country justified the action of that House of Parliament (the Commons in 1886, the Lords in 1893) which rejected them. The proposals of the Government for limiting the power or entirely altering the character of the second Chamber, suggest the obvious criticism : Why should the British Constitution be upset, why should all checks on hasty legislation be removed, at the will of the House of Commons, which, by the admission of prominent statesmen, is quite incapable of effectively discharging its own business ? Some reform of the House of Lords may be desirable on the lines of Lord Rosebery's resolutions ; but a House of Lords reformed by the inclusion of the elective element will be stronger than the House of Lords as at present constituted. The real remedy for the evils of the situation, which all deplore, does not consist in the reform or destruction of the House of Lords, but in making the House of Commons an effective legislative machine by a weU-considered measure of devo- lution. The establishment of subordinate legis- latures in the several countries of the United Kingdom, with powers similar to those of the provincial parliaments of Canada, has many arguments in its favour. 178 PROBLEMS OF EMPIRE 1. It relieves the congestion of business in the House of Commons. 2. It solves the Irish question on the only lines on which a satisfactory solution is possible. 3. It solves the House of Lords question by removing from its immediate control all purely domestic questions, and on this ground should appeal to all social reformers and representatives of labour. 4. It would prevent measures being imposed upon England by Scotch, Irish, and Welsh votes against the wishes of the majority of England's representatives, and on this ground should appeal to all English Conservatives. Englishmen have not yet felt the need of Home Rule as apphed to themselves, but Englishmen, and especially English Conservatives, will do so when they realise that, with a Conservative majority in England, a government depending on Irish, Scotch, and Welsh votes, and only able to hold office at the will of Mr. Redmond and his friends, a new situation has arisen. 5. It would enable a clear verdict to be obtained on Tariff Reform, and on this ground should appeal to all Tariff Reformers. It is more than probable that once the political grievance is removed, there would be a large majority for Tariff Reform in Ireland. 6. It would remove the great danger to the Empire from the possibility of a government being placed in power on some domestic issue, THE CRISIS AND THE WAY OUT 179 such as education or licensing, which the country- would not trust with the administration of Imperial affairs. On this ground it appeals to all Imperialists. The establishment of subordinate legislatures in the several countries of the United Kingdom must naturally be accompanied by a redistribution bill, the chief effect of which would be to reduce the over-representation of Ireland in the Imperial Parliament. Two great difficulties to be overcome are : (i) The objection of the Irish Unionists, whom English Unionists feel bound to support ; (2) Finance. As regards the former, the success of Mr. William O'Brien at the last election, the progress of land purchase, the altered tone of many Nationalist members who follow Mr. Red- mond, and the growth of moderate opinion in Ireland, are hopeful features. The Irish people are naturally conservative, and it is quite likely that there would be a Conservative majority in an Irish legislature. The difficulty of devising working financial arrangements for a scheme of federal government for the United Kingdom has immensely increased since 1903, when a paper, which was the result of six months' labour by myself and others, was read before the Royal Statistical Society. Large sums have been spent in Ireland from Imperial funds, the cost of gov- ernment in Ireland has not been reduced, and Ireland is no longer able to pay her way, still N 2 180 PROBLEMS OF EMPIRE less to contribute to Imperial expenditure. Great though these and other difficulties may be in the way of carrying out the policy under discussion, they are not insuperable. The difficulties to be overcome in Canada and Australia before feder- ation was achieved were at least as great. The present political situation is intolerable, and there is no daylight ahead so long as both political parties are governed by political prejudice. A way out must be found, and it is in the firm conviction that the way out lies through the establishment of subordinate legislatures in the several countries of the United Kingdom that the following address — the last of a long series delivered in the four self-governing portions of the Empire — is offered for consideration. THE BREAKDOWN OF PARLIAMENTARY GOVERNMENT, AND THE REMEDY (Address delivered at Hythe, January 21, 1913) It is, I think, fitting that on this my first public appearance in my name borough of Hythe — a title adopted in order to commemorate my father's connection with the Cinque Ports — I should address you on the big problems connected with the government of these islands and the maintenance of the unity of the Empire, to the study of which I have devoted the best energies of my life. As in the course of my address I shall deal with some of the burning political questions of the day, it is, perhaps, desirable to explain that my political faith was inspired while still at Oxford by the stirring addresses Lord Rosebery used to deliver in the early eighties in the cause of Imperial unity. I have spent several years of the last twenty-five in visiting the outlying dominions of the Empire in order to obtain a grasp of Imperial problems at first hand, and I have addressed public meetings in Australia, in Canada, and in South Africa on the subject on which I am to speak to you 182 PROBLEMS OF EMPIRE to-night. My father will, I think, endorse the statement that I have deliberately sacrificed my political career (and I had a far better opening than falls to the lot of most men) because I have always placed the interests of the country and the Empire above party, and if anything I say offends politicians on one side or the other, I trust you will remember that I address you to-night as an Englishman and an Imperialist, and in no sense as a party man. The subject of my address is ' The Breakdown of Parliamentary Government, and the Remedy.' My text is taken from Mr. Bonar Law's speech in the House of Commons on December 30. In the course of that speech Mr. Bonar Law said : ' Under the conditions under which we are working, the House of Commons has ceased to be a legislative assembly in any sense of the term,' and he concluded by asserting that if the parlia- mentary conditions as we now see them are to become permanent our institutions cannot be preserved, and, what is more, they will not be worth preserving. Those are weighty words from the leader of a great party and they demand far more serious consideration from the people of this country, and in particular from his followers, than has been given to them. To a non-party man like myself the present situation is serious, but the country is apathetic, and the only people who seem to care are the Ulstermen. A great constitutional change of far-reaching importance PAHLIAMENTARY GOVERNMENT 183 to the future of this country has been passed through the House of Commons, with many of its most important provisions undiscussed, by the methods common to our recent legislation, and may under the Parliament Act become law without ever having been submitted to the judgment of the electorate. The House of Lords can delay legislation ; it can no longer compel an appeal to the people. The House of Commons is omnipotent — though admitted on all hands to be unable to deal effectively with the business placed before it. The House of Commons has degenerated into a mere machine for registering the decrees of the Cabinet of the day, for the simple reason that it has too much to do. For this, neither political party is to blame. It is the result of the system by which we attempt to carry on the government of these islands and the Empire. ' The Parliament is overweighted, the Parlia- ment is almost overwhelmed,' were the words used by Mr. Gladstone in his Midlothian campaign thirty years ago. The congestion of business in Parliament has been lamented by statesman after statesman since that time. Sir Henry Campbell Bannerman in 1902 ' did not think that ' in the then state of things ' much could be done to check expenditure in the House of Commons, which was grievously over-burdened with work.' Lord Rosebery in the same year spoke of ' our over-burdened and over-labouring 184 PROBLEMS OF EMPIRE Parliament.' Mr. Balfour, in moving the reso- lution for the closure by compartments of the Committee discussion of the Education Bill on November ii, 1902, said : ' It amounts to an admission that our rules — great as are the changes effected in those rules since closure was first proposed by Mr. Gladstone twenty years ago — that our rules, with all these changes, are not sufficient to enable this House to deal with the legislative work that is put before it.' Lord Loreburn, ex-Lord Chancellor, said in the same year : ' It was not Irish affairs merely that obstructed the business in the House of Commons. It was English and Scottish and Imperial business that stopped the way. The result was that the control of expenditure was neglected, and the public suffered. The administrative depart- ments were not supervised, they were a law unto themselves, and the conduct of foreign affairs eluded the examination of the House of Commons.' I make no apology for troubling you with these quotations, because the cause of the evil of which Mr. Bonar Law spoke so vigorously the other day has been pointed out over and over again by prime ministers and other leading statesmen in days gone by. Parliamentary gov- ernment has broken down because we are attempt- ing to deal in a single legislative assembly with three distinct classes of business : (i) The in- ternal affairs of England, Scotland and Ireland, PARLIAMENTARY GOVERNMENT 185 which in Canada would be dealt with by the provincial parliaments of Ontario and Quebec, in Australia by the colonial parliaments of Victoria and New South Wales, and in South Africa by the provincial parliaments of the Cape and of the Transvaal ; (2) Questions affecting the United Kingdom as a whole, which would be dealt with in Canada by the Dominion Parlia- ment, in Australia by the Commonwealth Parlia- ment, and in South Africa by the Union Parliament ; (3) The government of the greatest Empire the world has ever seen, including within its borders nearly a quarter of the human race. It is not astonishing that parliamentary govern- ment under these circumstances has broken down. To a Canadian, an Australian, or to a South African, or to anyone who has passed as much time as I have in the outlying dominions, the reason is obvious. We in the Old Country have been accustomed from time immemorial to see all our affairs — both National and Imperial — dealt with by what we are pleased to call the Mother of Parliaments, while every Canadian, every Australian, and every South African is living under three parliaments, each dealing with a distinct class of business : (i) His Colonial or Provincial Parliament ; (2) The Dominion, Commonwealth, or Union Parliament, as the case may be ; and (3) The Imperial Parliament, in which at present he is not represented. The country is to-day being governed very 186 PROBLEMS OF EMPIRE largely by lawyers — at any rate lawyers occupy prominent positions in every political party. It would perhaps be better for the country if men of business were substituted in some cases for lawyers. Let us look at the question from the point of view of the man of business. How could any business be successfully carried on in the way in which we attempt to conduct the government of the United Kingdom and of the British Empire ? The government of the United Kingdom may be compared to a great business concern such as Messrs. Vickers or Messrs. Arm- strongs, with three or four great departments — shipbuilding, engine building, the manufacture of armour, and the manufacture of guns. Does the general manager of a great business of this kind permit the head of his shipbuilding depart- ment to interfere with the details of the adminis- tration of the gun-making department or vice versa ? An illustration from one's own ex- perience may be even more forcible. I am chairman and managing director of a business in Italy which has mines in Sardinia, where the raw material is produced, smelting works at Spezia, where the raw material is turned into the marketable product, and a sales depart- ment at Genoa, which sells the product. If I allowed the manager of our smelting works to interfere in the administration of the mines, if the general manager of a business such as Messrs. Vickers attempted to supervise the details of PARLIAMENTARY GOVERNMENT 187 every department and did not leave very con- siderable responsibility to the heads of each department, it would not be very long before the business came to grief. How can the people of this country expect the government of these islands and the Empire to be satisfactorily con- ducted on principles which would be fatal to any commercial or industrial concern ? A business man responsible for the administration of the government of this country would establish managers for each department ; relieving the general manager (the Imperial Parliament) of the duty of attending to details and setting him free to devote his whole energies to the larger questions with which alone he should concern himself. Let us now look at the question from the point of view of an Englishman, and especially from that of an English Conservative. There is a Conservative majority in England. Why should socialistic legislation be imposed on England by the votes of men who are certainly not Socialists ? Do not forget that many Nationalist members are Conservatives, and that the interests of agricultural Ireland are the same as those of agricultural England. Why should the Church in Wales be disestablished by the votes of Irishmen and Scotchmen, who have no concern in the matter at all ? Why should the Church of England in England be disestablished by Irish Roman Catholics, Scotch 188 PROBLEMS OF EMPIRE Presbyterians, and Welsh Noncomformists ? It is a question which concerns us Englishmen, and by the votes of our representatives alone should such a question be decided. I think that if English Conservatives would reflect on the consequences of maintaining the present system of government, they would arrive at the same conclusion as I have, viz. that it is time we Englishmen managed our own affairs without the interference of Irishmen or Scotch- men, and that Home Rule is needed for England quite as much as for Ireland. We must now turn to the Imperial side of the question. The great danger to the future of the Empire is the fact that Imperial and domestic questions are, under our present system of government in the Mother Country, dealt with in the same Parliament and are submitted to the electorate in the same confused issue. At one time an Imperial question may be to the front and a government placed in power on that issue. This was the case at the election of 1900, when the South African war was in progress. The Conservative party obtained a sweeping majority, and when the war was over they proceeded to deal with the education and other domestic questions on lines which, as the ensuing general election showed, were not approved by the majority of the electors. At another time a question may be to the front only affecting the people of these islands and of no importance to PARLIAMENTARY GOVERNMENT 189 the Empire at large, and a government placed in power on that issue which the country would not trust with the administration of Imperial affairs. The danger to the Empire from the con- tinuance of the present system of government lies, then, in two directions. On the one hand, it tends to throw a large proportion of the democracy of the homeland into an attitude of hostility to the Empire, because they very naturally resent questions of supreme importance to them in their daily lives being at any time subordinated to Imperial matters. Have you ever reflected why the great democracies in Canada, in Australia, and New Zealand are enthusiastically Imperialist, even with a Labour government in power ; and why they readily take upon themselves the liability to serve in defence of their respective countries ? The reason is simple. Social legislation is never obstructed or set aside in the Oversea Dominions by Imperial interests. On the other hand, the present system of government prevents a clear verdict being obtained from the electorate on Imperial questions, such as Imperial preference. The importance of the question to this portion of the Empire has much increased owing to the alternative policy put before the people of Canada at the general election of last year. It may or may not be worth while for the people of this country to submit to a small tax on corn for the purpose of effectively reciprocating the preference 190 PROBLEMS OF EMPIRE given by Canada and the other dominions over- seas to British goods. I am not arguing for or against the poHcy of Imperial preference. My point is that, so long as the present system of government continues, it is impossible to obtain the real judgment of the country on the policy. So much for the danger of our present system. There is another reason equally important — I refer to the growth of naval expenditure — why the practice of dealing with three classes of business in our Parliament cannot be indefinitely con- tinued. For over twenty years it has been one of my principal duties to review annually the progress of the navies of the world in the ' Naval Annual,' founded, and in its early years conducted, by my father. Up to the end of last century there was no navy which could bear serious comparison with our own but that of France. During the present century many new naval powers have arisen — Japan, the United States, Germany, and Austria. The British Navy is no longer supreme in any sea to the extent it was fifteen years ago. Every first-class power has enormously increased its expenditure on its navy ; and even South American republics are acquiring ships as powerful as any in the world. The question has quite recently become acute owing to the growth of the German Navy. In the last ten years the German navy estimates have doubled, and the expenditure on new con- struction has practically trebled. PARLIAMENTARY GOVERNMENT 191 While Germany has increased her expenditure on new ships from (in round figures) 4 to 12 millions per annum, the British vote for new construction has been increased from 12 to 14 millions. The result is that Germany has a very formidable force in readiness for service in the waters of Northern Europe, and to meet it the Admiralty have felt compelled to withdraw large numbers of ships from foreign stations and to concentrate our battleships in home waters. The Mediterranean battle squadron was for a time withdrawal ; the China battle squadron has disappeared ; in the West Indies, in the waters of South America and other regions of the world where we have vast commercial interests the British flag is hardly ever shown, and even then only by an insignificant cruiser. To men like the Lord Warden, Admiral Bridge, and myself, who have sailed these seas in former days, the change is significant. ' Commerce follows the flag ' is an old saying, and, to a great extent, true. At any rate we cannot maintain our sea power without showing the flag. The oversea trade and the mercantile marine, on the prosperity of which this country so largely depends, and which the British Navy has to protect, are not growing smaller. The figures of our oversea trade for the past year are quite unprecedented, and our shipbuilding yards have never been so full of work as they are at the present time. 192 PROBLEMS OF EMPIRE From this point of view alone the maintenance of our sea power was never more vital than it is to-day. We have been urging for many years in the ' Naval Annual ' and elsewhere that the burden of defending our Empire was becoming too heavy for the people of these little islands alone, and the time has come when the Oversea Dominions must assist the Mother Land to bear the burden if our sea power is to be maintained. This they have already begun to do in no grudging spirit. New Zealand has presented a battle cruiser to the British Navy. Australia is building a naval unit of her own. The Malay States have offered a battleship. Mr. Borden proposes that three ships of the most powerful type shall be built at Canadian expense for the British Navy — as a temporary measure. In the very remarkable speech which he made in putting his proposals before the Dominion Parliament he stated his belief that the naval defence of the Empire can best be provided for by one navy under single control, but he claimed, as his predecessor. Sir Wilfrid Laurier, had done, that if the Oversea Dominions bore their share of the burden, they must have a voice in the control of Imperial expenditure and Imperial policy. I have always held that Mr. Borden's view of Imperial defence is the sound one. While the military forces of the Empire must remain under the control of the governments of the countries to which they respectively belong, the naval PARLIAMENTARY GOVERNMENT 198 defence of the Empire cannot be efficiently provided for by a number of local navies, which may or may not be thrown into the scale in the event of war. The naval defence of the Empire must be under one control, and if that principle be adopted, the Dominions which bear their share of the burden must have a constitutional voice in the councils of the Empire. The addition of a Canadian representative to the Committee of Defence is admittedly but a temporary solution of the question. In what precise form Colonial representation will ultimately be provided for, I am not pre- pared to suggest, but I do assert that it cannot be done by adding Colonial representatives to the House of Lords, the Privy Council, or any existing body, that an Imperial council or parlia- ment will have to be created if the British Empire is to remain united, and that the next step in the direction of Imperial unity is for the Mother Country to set her house in order and put her constitutional arrangements on the same plane as those of the other self-governing dominions. My conception of the constitutional structure of the British Empire is that it must rest on four federations, or four pillars, in Canada, Australia, South Africa, and the United Kingdom, on which the crown of the Imperial Empire — an Imperial council or parliament — might some day be set up. When I began to talk on 194 PROBLEMS OF EMPIRE Imperial problems twenty-five years ago, only one of those pillars — the Canadian — was built. Fourteen years ago the Australian Common- wealth was established, three years ago the Union Government of South Africa was formed. It is only the Mother Country that lags behind, and she, with her enormously greater population, has far more need to put her government on a business footing than Canada, Australia, or South Africa. Those have all been federated (using the word in a loose sense) on different lines. In Australia too much power for the smooth working of the constitution was, perhaps, naturally left to the Colonial legislatures, which had long been independent. In South Africa the Union Parlia- ment is omnipotent, and the powers left to the provincial legislatures are not sufficient to meet our case. The Canadian constitution affords the best model of what we require here, and it was evolved on similar lines to those which must be followed in our own case. Under it the legisla- tive union of Ontario and Quebec was dissolved, and to each was granted a separate legislature. Under the Canadian constitution the powers of the provincial legislatures are defined, and all the reserve of power is left to the Dominion Parliament. The establishment of subordinate legislatures in England and Scotland, as well as in Ireland, is the real solution of our present difficulties. Incidentally it would to a great extent solve the House of Lords question by PARLIAMENTARY GOVERNMENT 195 removing from the control of the House of Lords all those questions which affect the people in their homes. In the light of Canadian experience it is idle to assert that this would be tantamount to the dismemberment of the United Kingdom. I have endeavoured to show that parlia- mentary government has broken down and that the House of Commons, while by the Parliament Act it has become omnipotent, is no longer an effective legislative machine for the simple reason that it is attempting the impossible. I have pointed out how the interests of the people of these islands and of the Empire at large suffer under present conditions, and I urge that the problem of amending our constitution to meet present-day needs must be approached with a greater breadth of view and with a more reasonable spirit than are being displayed by party politicians on both sides in the bitter controversy over the Irish Home Rule Bill. The Irish Home Rule Bill has been passed through the House of Commons with important provisions undiscussed. The financial clauses have been condemned as unjust to Ireland by authorities like Lord MacDonnell and Mr. William O'Brien, though I by no means agree with all their contentions. The powers — restricted though they be — over Customs given to the Irish Parliament and over the Post Office prevent the Bill becoming the first step in a Federal scheme. The extremely complicated 196 PROBLEMS OF EMPIRE provisions as to the representation of Ireland at Westminster are with me a fatal objection to the Bill. From the British point of view the 42 members are 42 too many. As an Englishman, I do not want an Irishman, be he Orangeman or Nationalist, to interfere in my affairs, whether it be Church Disestablishment or any other matter. Three other methods — total exclusion, total inclusion (of which the present plan is a modification), and the 'in-and-out' plan have on previous occasions, in 1886 and 1893, been proposed for dealing with Irish repre- sentation in the Imperial Parliament. All have been shown to be objectionable from one point of view or the other. The truth is that no satis- factory measure of Home Rule for Ireland can be devised except as part of a Federal scheme applicable to the other countries of the United Kingdom. The present Bill, with aU its defects, the Liberal party apparently propose to pass into law under the Parliament Act without an appeal to the country. Large numbers of Ulstermen have entered into a covenant to resist the appli- cation of the Bill to Ulster, if necessary, by force. The Unionist party are meeting the Bill with a blank negative, and have so far been prevented from considering the federal solution by their loyalty to the Irish Unionists. Party men on either side may be satisfied with the sitiiation, but it is high time that men who place their PARLIAMENTARY GOVERNMENT 197 country before party intervened. As a non-party man I say that if the principles of democratic government are to stand, the Irish Home Rule Bill cannot become law without an appeal to the country. It is no doubt true that the prin- ciple of Home Rule was before the country at the last election ; but the present measure was not. The Irish Home Rule Bill cannot be imposed on Ulster by force. The British Army cannot be employed for such a purpose without risking consequences too serious to contemplate. We may deplore the racial and religious prejudices aroused by Sir Edward Carson's campaign. No one deplores them more than I do, for nine years ago I presided over a crowded meeting in the Derry Guildhall when an appeal to all Irishmen, irrespective of race or creed, to work together for the good of their common country met with an attentive and sympathetic hearing. But the prejudices have been aroused, and the armed resistance of Ulster is a factor in the situation which the Liberal party cannot ignore. The Unionist party, on the other hand, are not justified in their blank refusal to consider any alternative to the Bill which they are so vigorously opposing. It is their bounden duty, after the speech of a leader who tells them that under present conditions parliamentary institu- tions cannot be preserved, to suggest a remedy. The present situation is intolerable. A way out must be found. Parliamentary government 198 PROBLEMS OF EMPIRE must be restored. The Home Rule question, which has been the bane of British pohtics for so many years, must be settled. A measure of Federal Home Rule, which will relieve the congestion of business in Parliament, which will put an end to the Irish controversy, and which will incidentally go far to solve the House of Lords question, is the obvious and, in my belief, the only remedy. No durable settlement of constitutional difficulties can be secured except by consent, and to that end I urge that the whole constitutional question — Home Rule and House of Lords — be referred to a conference or convention on the South African model, in which all parties and all nationalities of the United Kingdom must be represented. THE DOMINIONS AND IMPERIAL DEFENCE (Reprinted from the ' Naval Annual,' 1913) For many years, in these pages and elsewhere, I have pointed out that the burden of defending the Empire was becoming too heavy for the Mother Country to bear alone, and that it was the duty of the outlying dominions to come to her aid. This duty they have already begun to recognise, and the fact that they have done so has been a great strength to the Mother Country in recent years. The assistance they have so far given has been intended to meet the exigencies of the moment. No definite principles as to the part which the Oversea Dominions should play in the defence of the Empire have yet been laid down or, at any rate, generally accepted. If the resources of the whole Empire are to be drawn upon for the common defence — and they must be if the Empire is to stand — it is certain that every dominion which bears its share of Imperial burdens is entitled to a voice in the control of Imperial expenditure and Imperial policy. The attitude taken up by the present Canadian 200 PROBLEMS OF EMPIRE Government, under the leadership of Mr. Borden, on the question of naval defence is bringing us very rapidly face to face with the problem of Imperial Federation. It will not be out of place to review in the ' Naval Annual ' the progress of the movement in the direction of Imperial unity, and to point out the difi&culties which have to be overcome before the object in view is realised. When the editor commenced his duties twenty years ago, and up to the end of the last century, there was no navy which could be seriously compared with our own but that of France, and our naval policy was largely, if not mainly, governed by French action. Our navy was supreme in nearly every sea, and the British flag was shown and respected in all quarters of the globe. During the present century a com- pletely new situation has arisen. Powerful navies have sprung into existence in the United States, in Japan, and in Germany. Every first-class European power has largely increased its ex- penditure on its navy. This is true of France and Russia, of Austria and Italy, as well as of Germany. Spain has seriously commenced the creation of a navy, and the South American republics, Brazil, Argentina, and Chile, have acquired, or are building, ships as powerful as any in the world. The United States is the only first-class power which has reduced her naval expenditure in recent years. DOMINIONS— IMPERIAL DEFENCE 201 It is the growth of the German Navy above all which has affected the situation. In the last ten years German naval expenditure has more than doubled, and her expenditure on new construction has nearly trebled. Though the British Navy estimates for the year 1912-13 amounted to the vast sum of £44,000,000, or almost exactly double those of Germany, the sum Germany is able to devote to new construction is not far short of our expenditure for this purpose. During the current year Germany is spending in round figures £12,000,000 to our £14,000,000. The explanation of this fact is the greater cost of the personnel and the larger number of ships maintained in commission in the British Navy. The result in the increase of German naval ex- penditure is that Germany now has a formidable naval force in immediate readiness for service in the waters of Northern Europe, and to meet the new situation large numbers of ships have been withdrawn from foreign stations, and practically the whole of our fighting strength has been concentrated in home waters. The China battle squadron has disappeared. The Japanese Navy is undisputed mistress of the Eastern Seas. In the Mediterranean ten years ago we maintained a powerful fleet. The Mediterranean battle squadron has ceased to exist. For a time last year the Mediterranean, our great highway to Egypt and the East, was without a British battleship. In the West Indies, 202 PROBLEMS OF EMPIRE in the waters of South America, and other regions of the world where we have vast commercial interests, the British flag is hardly ever shown, and then only by a small cruiser. Twenty years ago the cost to the British taxpayer of Imperial defence was £35,500,000, of which in round figures £20,500,000 were spent on the Army and £15,000,000 on the Navy. Though our expenditure on Imperial defence has doubled in the last twenty years, and though the proportions of our naval and military ex- penditure have been normal, we are not able to give that protection to our interests in distant seas which those interests demand. The realisation of this fact in New Zealand and Australia led to the offer of battleships to the British Navy in the spring of 1909. Since 1887 an annual contribution to the cost of the maintenance of the Australian squadron of the British Navy has been made by the Governments of Australia and New Zealand, but in 1909, for the first time, it was recognised that something more substantial was necessary. The offers were accepted, and the Conference of 1909 was summoned to discuss the whole question of the naval and military defence of the Empire. The Conference accepted the principle, which I have always maintained, that the military forces of the self-governing Dominions must remain under the complete control of the respective governments, but it was arranged that the organisation, the DOMINIONS— IMPERIAL DEFENCE 203 staff, the arms, and equipment should be, as far as possible, standardised so that, to quote the Prime Minister's words : ' Should the Dominions desire to assist in the defence of the Empire in a real emergency, their forces could rapidly be combined into one homogeneous Imperial Army.' As the result of the measures decided upon at the Conference, and of others taken since, consider- able progress has been made in the organisa- tion of effective military forces in the Oversea Dominions, notably in Australia and New Zealand. As to naval defence, no definite principle was, or could be, laid down by the Conference. New Zealand preferred to adhere to her policy of con- tribution ; South Africa was not in a position to do more than continue her contribution. Australia and Canada preferred to lay the founda- tions of fleets of their own. It was decided to establish a Pacific fleet of three units in the East Indies, in Australia, and China, each consisting of a battle-cruiser and three second-class cruisers, besides destroyers and submarines. The battle- cruiser (substituted for battleship) offered by Australia was to become the flagship of the Australian unit, that offered by New Zealand of the China unit. The then Government of Canada proposed to construct in Canada a few second- class cruisers and destroyers for Canadian defence. At the Imperial Conference of 191 1 a Memor- andum between the Admiralty and representatives of Canada and Australia was submitted defining 204 PROBLEMS OF EMPIRE the status of the Canadian and AustraUan navies, as follows : * The naval services and forces of the Dominions of Canada and Australia will be exclusively under the control of their re- spective governments.' These words signified that it rested with the respective governments to decide whether their naval forces should be utilised in the common defence in case of war, thus recognising the position that Sir Wilfrid Laurier had taken up. This position is by no means satisfactory in the writer's opinion. The Dominions must either stand in the Empire or outside it. No Dominion can claim the help of the British Navy in officers and men in building up her navy, and to have the whole weight of the British Empire behind her when her interests are at stake, and be free to stand aloof when trouble arises over some question with which she is not immediately concerned. The most important decision of the Conference was that one or more representatives appointed by the governments of the Dominions should be invited to attend meetings of the Imperial Defence Committee when questions affecting the Oversea Dominions were under discussion. In the autumn of igii a change took place in the Government of Canada, and last summer Mr. Borden and three of his colleagues (who hold very different views from their predecessors) visited England to consult with his Majesty's Government as to the part Canada should play DOMINIONS— IMPERIAL DEFENCE 205 in the defence of the Empire. The Government made it absolutely clear to Mr. Borden that the Committee of Imperial Defence is a purely advisory body and cannot under any circumstances become a body deciding on policy, which is, and must remain, the prerogative of the Cabinet ; but they gave assurances that any Dominion Minister resident in London would at ill times have free access to the Prime Minister, the Foreign Secretary, or the Colonial Secretary for information on all questions of Imperial policy.' Mr. Harcourt, in his speech in the House of Commons, which is quoted in the despatch, put the position admirably. ' The door of fellowship and friend- ship is always open to the Dominion Ministers, and we require no formalities of an Imperial conference for the continuity of Imperial con- fidence.' Mr. Borden cordially accepted repre- sentation on the Committee of Imperial Defence, as a satisfactory though admittedly temporary solution of the question of giving the Dominions some voice and influence in the Councils of the Empire, in the great speech he delivered in the Canadian Parliament in December, and in response to the Admiralty Memorandum he proposed that Canada should at once present three vessels of the most powerful type to the British Navy, which in the event of Canada eventually deciding to have a navy of her own could, if Canada desired, ^ Cf . Mr. Harcourt's despatch to the governors of the other self-governing Dominions, published as a Parliamentary Paper in January 1913. 206 PROBLEMS OF EMPIRE become the nucleus of that navy. Mr. Borden, while expressing in unmistakable terms his own opinion in favour of one Imperial Navy, has left for future discussion the form which Canada's assistance to naval defence of the Empire should take. On this review of what has taken place two observations may be made. Canada has been slower than the other Dominions in recognising her responsibilities for Imperial defence, but it is satisfactory to feel that she has now recognised them in a manner worthy of the Canadian people. In the second place, the difficult question of giving the Oversea Dominions some voice in the councils of the Empire in this period of transition has been admirably handled by the Colonial Secretary, Mr. Harcourt, and his Majesty's Government. Representation on the Committee of Imperial Defence was the proper way of dealing with the matter. Having reviewed the recent history of the problem under consideration, we must now face the facts of the situation and endeavour to make some suggestions as to its solution. We have seen that we have a navy concentrated in home waters and powerful enough at the decisive point, but which does not give adequate protection to our outlying dominions and dependencies and to our commerce in distant seas. We are dependent on the good-will of France for the passage through the Mediterranean. Australia, with her enormous sparsely-peopled territory, DOMINIONS— IMPERIAL DEFENCE 207 the Pacific coast of Canada, India, and our other Eastern possessions would be exposed to attack by Japan if good relations did not exist between the two Empires. China has a population equal to that of the whole British Empire. Whatever may be said of the governing classes, the mass of the population are of a sturdy and virile race. The possibilities of China developing into a world Power, and the desire of both Japan and China for expansion, must not be forgotten when con- sidering the facts of the situation. The Empire needs a navy sufficiently powerful to defend its possessions and its commerce in all quarters of the world. It needs that navy for the purpose of defence and not for aggression. Within the area of the Empire the British race has sufficient possibilities of expansion to satisfy the most ambitious Imperialist. So long as we possess an all-powerful navy the Empire is invulnerable, except in Canada and in India, which have long land frontiers. With our small army other Powers are invulnerable by us, except in their commerce and oversea possessions. We need a foreign service army for the defence of India, and for attack on the coaling stations and colonies of any possible enemy. Every dominion should possess its expeditionary force under the control of their respective governments, but capable of serving the Empire whenever called upon to do so. The military side of the question of Imperial defence is a comparatively simple one. 208 PROBLEMS OF EMPIRE The general principles have been agreed upon, and it only remains for the people of the Mother Country to recognise, as the peoples of our demo- cratic dominions have done, that the first duty of a citizen is to defend his own country. The naval side of the question is by no means so simple. In what form is the help of the Dominions to be given — on the Australian plan or on the plan favoured by Mr. Borden ? The establishment of independent navies in the several dominions is open to the grave objections which have often been stated. On the other hand, it is possibly the best, in some cases the only, way of inducing, at the present stage, the people of our Oversea Dominions to co-operate in naval defence. This, at any rate, is certain, that we must accept the help of the Dominions in whatever form they may please to offer it. Before Canada, Australia, or South Africa finally adopts the policy of independent navies, built and manned in the respective dominions, let them consider all that such a policy entails, and count the cost. It is one thing to build warships in this country, with its highly-developed resources, not only for building the hulls and engines, but for suppljdng guns, armour, and the enormous mass of auxiliary machinery which are required in a modern warship. The want of such establishments in Italy for providing this subsidiary machinery has been one of the chief causes of the delay in the construction of Italian DOMINIONS— IMPERIAL DEFENCE 209 warships. From the broadest Imperial point of view it is undoubtedly desirable that there should be at Halifax and Esquimault, at Sydney, at Auckland, and at Cape Town, dockyards capable of dealing with the largest repairs. It might be ajti advantage that shipyards capable of building warships of all classes should be established in Canada and Australia, but the cost would be enormous, and the outcry raised in Canada against Mr. Churchill for pointing out the cost appears singularly out of place. In any case, the object in view can only be gradually attained on the lines adopted by Australia and proposed by Mr. Borden for Canada. Shipyards should be established capable of building destroyers and light cruisers, before the construction of battleships and battle-cruisers is attempted. The development of the resources for the construction of such ships ; the building up of a body of skilled workmen will take many years. Again, it is one thing to build warships ; it is quite another to officer and man them. There is at present little indication that either Australia or Canada wUl be able to do this for several years to come, though progress in the desired direc- tion has been much greater in Australia than in Canada. In Australia the number of Australian- born men recruited for the Navy is approaching 1400, besides some 350 men of the existing Aus- tralian naval forces. The number recruited in Canada for the Niohe and Rainbow does not 210 PROBLEMS OF EMPIRE exceed 300, and of these some have ceased to serve. It must not be forgotten that it takes nine years to train an officer and five years to train a seaman for any of the skilled ratings. On these considerations and a general review of the whole question the conclusion is inevitable that, whatever may be done to satisfy the con- ditions at the moment, the naval defence of the Empire can be more efficiently provided for by one Imperial Navy under single control than by a number of independent navies under the control of the various dominions. If we are to have one Imperial Navy, to the maintenance of which the resources of the whole Empire are to con- tribute, we are compelled to face the problem of Imperial Federation. The maintenance of the unity of the Empire depends upon the recognition of two principles : — 1. The right of every part of the Empire which is capable of self-government to manage its own internal affairs in its own way. 2. The right of every part of the Empire which bears its fair share of Imperial burdens to a constitutional voice in the control of Imperial expenditure and the direction of Imperial policy. The first principle is recognised as far as the outlying Dominions of the Empire are concerned. It implies that the Imperial Government, which is at present responsible only to the people of the United Kingdom, has no right to interfere in matters which exclusively concern the people of DOMINIONS— IMPERIAL DEFENCE 211 Canada or of any other of the outlying dominions. It also implies that the Oversea Dominions have no right to interfere in questions which concern the people of the United Kingdom. The recognition of the second principle in- volves two things — viz. the raising of an Imperial revenue, and the constitutional representation of those dominions which contribute their fair proportion of the Imperial revenue in the councils of the Empire. As to the raising of the Imperial revenue, my remarks will be brief. Such a revenue may be raised by each part of the Empire paying its quota into a common fund. On what principle the quota is to be based for the self-governing Dominions, on what principle that for India and the dependencies, will be a difficult problem to solve. The simplest solution is that suggested by the late Mr. Hofmeyr at the Colonial Con- ference of 1887. Mr. Hofmeyr proposed that every part of the Empire, while pursuing its present fiscal arrangements or modifying them as it pleased, should impose a differential duty on non-Imperial goods of 5 per cent., or whatever amount might be required. The advantage of this plan is that the Mother Country could adhere to her present Free-Trade policy and the Over- sea Dominions might remain Protectionist as regards goods coming from within the Empire. All would impose the duty on non-Imperial goods. P 3 212 PROBLEMS OF EMPIRE Before we can consider the representation of the Dominions in the councils of the Empire, it is necessary clearly to understand how the Empire is at present governed and what should be its constitutional structure. This will best be understood from the accompanying diagram,^ which is based on the conception that the con- stitutional structure of the Empire must rest on four pillars or four federations (using the word in a loose sense) in the self-governing Dominions. Forty years ago the first of these pillars was completed, viz. that in Canada ; fourteen years ago the second pillar, the Common- wealth Government of Australia, was set up ; three years ago the third pillar, the Union Government of South Africa, was established. As far as the outlying portions of the Empire are concerned, the pillars of the Imperial structure IMPERIAL PARLIAMENT I I . United Domimoa Kingdom Parliament ParliiX- of Canada. ment. Common- Union wealth Parliament Parliament of South of Australia. Africa. I I I I I I I I I I I I I I I MM C3 S in Is (8 m t8 s s 1-- 1^ o ^ S 3 (« 2 Q 3 a o'C ao!zipq =« ■« a o a N a g 5 ^ ■a •I u a S ' Cf; p. 78, where the Union Parliament of South Africa is shown in italics. DOMINIONS— IMPERIAL DEFENCE 213 are built — though each has been built on very different lines. It is only the Mother Country that lags behind, and it now rests with us to set our house in order before any further advance towards Imperial unity can be made. The main point which is so difficult for Englishmen to grasp is this, that while every Canadian, every Australian, and every South African is living under three parliaments or councils, each dealing with a distinct class of business, we in the Old Country are attempting to deal in a single " legislature with three distinct classes of business : — 1. The internal affairs of England, Scotland, and Ireland, which in Canada would be dealt with by the provinical parliaments of Ontario and Quebec ; in Australia by the colonial parlia- ments of Victoria and New South Wales ; in South Africa by the provincial councils of the Cape Colony or the Transvaal. 2. Questions affecting the United Kingdom as a whole, which would be dealt with in Canada by the Dominion Parliament, in Australia by the Commonwealth Parliament, and in South Africa by the Union Parliament. 3. The government of the greatest Empire the world has ever seen, including within its borders nearly a quarter of the human race. To carry on the government of the Empire and of these islands as we are attempting to do is no longer possible. That the Mother of Parlia- 214 PROBLEMS OF EMPIRE ments has broken down is now admitted on all hands. Liberal statesmen, from Mr. Gladstone onwards, have pointed out that the Parliament was overweighted. On December 30 last the leader of the Conservative party stated : ' Under the conditions under which we are working the House of Commons has ceased to be a legislative assembly in any sense of the term ' ; and he concluded his speech by asserting that if the parliamentary conditions as we now see them are to become permanent our institutions cannot be preserved, and, what is more, they will not be worth preserving. A remedy for the present intolerable situation must be found ; devolution in some shape or other is necessary from the point of view of the Mother Country. This is a side of the question into which we need not enter in these pages. It is, however, necessary to point out the danger to Imperial interests and to the maintenance of Imperial unity from Imperial questions and British domestic questions being dealt with by the same authority and submitted to the electors in the same confused issue. At one election, as in the year 1900, a government may be placed in power on a great Imperial issue and proceed to deal with domestic questions in a way not approved by the majority of the electorate. At another election, some question, such as licensing or education, of no importance to the Empire at large, may be to the front, and a government DOMINIONS— IMPERIAL DEFENCE 215 placed in power which the majority of the people would not trust with the administra- tion of Imperial interests. The reason why the democracies in Australia and our other Oversea Dominions are in the main Imperialist is because their domestic interests are not subordinated to Imperial issues as those of the British democracy were in an election such as that of 1900. The great Oversea Dominions will not long permit the interests of the whole Empire to remain at the mercy of British party politics. For this reason, as well as for those already mentioned, better provision for the government of the Empire must be made. In days gone by suggestions used to be made for giving the Oversea Dominions a voice in Imperial councils by adding their representatives to the Privy Council, the House of Lords, or even, on the French plan, to the House of Commons ; but it is now generally admitted that the authority by which this Empire is to be governed in the future cannot be evolved out of existing insti- tutions. It must be a parliament or council created ad hoc which will contain representatives of India, the West Indies, of the Malay States, and of our dependencies in Africa, &c., as well as of the great dominions, viz. of all who bear their share of Imperial burdens. One Imperial Navy, maintained by the resources of the whole Empire, an Imperial parliament or council, in which the Oversea 216 PROBLEMS OF EMPIRE Dominions are constitutionally represented, and which will control Imperial expenditure and Imperial policy, are the aims for which we must strive, but they cannot be realised at once. It must be borne in mind that the Empire is in a transition stage. The Colonial Conference has only recently become the Imperial Conference. The Colonies have only recently become Dominions, and the Dominions are only just beginning to feel that they must play a serious part in Imperial defence if the Empire is to be adequately defended at all points. During the transition stage it may be necessary to accept the help of the Dominions in the form of units in close touch with the Imperial Navy, though controlled by the Dominion governments in time of peace. There is every reason to believe that the Dominion units will be freely placed under the control of the British Admiralty in time of war. As Mr. Watt, the Premier of Victoria, said at a recent luncheon under the auspices of the Colonial Institute : ' While it is important to know whether the navies which had been built by Canada or Australia should be controlled by the contributing units or be under the direct control of the Admiralty, it was still more important to know that those ships were to be built, and that when their guns spoke they would speak in defence of the interests of British unity.' Though Imperial Federation is not yet an accomplished fact, we have progressed, and are progressing steadily DOMINIONS— IMPERIAL DEFENCE 217 and without a set-back, in the desired direction. The prospects of the British Empire remaining united and being able to hold its own against all comers are infinitely stronger than they were twenty-five years ago. 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