origin of a great portion of the House of Commons procedure, and there is no more deeply rooted maxim than the maxim of "grievances before supply." Now, let me suppose a system of preference in operation. When the taxes came up to be voted each year, members would use those occasions for debating Colonial questions. I can imagine that they would say: We refuse to vote the preference tax to this or that self-governing Dominion, unless or until our views, say, on native policy or some other question of internal importance to the Dominion affected have been met and have been accepted. At present, it is open to the Colony affected to reply: These matters are matters which concern us; they are within the scope of responsible, self-governing functions, and you are not called upon to interfere. It is open for the Dominion concerned to say that. It is also open for the representative of the Colonial Office in the House of Commons to say that, too, on their behalf.
But it will no longer be open, I think, for any such defence to be offered when sums of money, or what would be regarded as equivalent to sums of money, have actually to be voted in the House of Commons through the agency of these taxes for the purpose of according preference to the different Dominions of the Crown, and I think members will say, "If you complain of our interference, why do you force us to interfere? You have forced us to consider now whether we will or will not grant a preference to this or that particular Dominion for this year. We say we are not prepared to do so unless or until our views upon this or that particular internal question in that Dominion have been met and agreed to." I see a fertile, frequent, and almost inexhaustible source of friction and vexation arising from such causes alone.
There is a more serious infringement, as it seems to me, upon the principle of self-government. The preferences which have hitherto been accorded to the Mother Country by the self-governing States of the British Empire are free preferences. They are preferences which have been conceded by those States, in their own interests and also in our interests. They are freely given, and, if they gall them, can as freely be withdrawn; but the moment reciprocity is established and an agreement has been entered into to which both sides are parties, the moment the preferences become reciprocal, and there is a British preference against the Australian or Canadian preferences, they become not free preferences, but what I venture to call locked preferences, and they cannot be removed except by agreement, which is not likely to be swiftly or easily attained.
Now I must trench for one moment upon the economic aspect. What does preference mean? It can only mean one thing. It can only mean better prices. It can only mean better prices for Colonial goods. I assert, without reserve, that preference can only operate through the agency of price. All that we are told about improving and developing the cultivation of tobacco in South Africa, and calling great new areas for wheat cultivation into existence in Australia, depends upon the stimulation of the production of those commodities, through securing to the producers larger opportunities for profit. I say that unless preference means better prices it will be ineffective in achieving the objects for the sake of which it is urged. But the operation of preference consists, so far as we are concerned, in putting a penal tax upon foreign goods, and the object of putting that penal tax on foreign goods is to enable the Colonial supply to rise to the level of the foreign goods plus the tax, and by so conferring upon the Colonial producer a greater reward, to stimulate him more abundantly to cater for the supply of this particular market. I say, therefore, without hesitation, that the only manner in which a trade preference can operate is through the agency of price. If preference does not mean better prices it seems to me a great fraud on those who are asked to make sacrifices to obtain it; and by "better" prices I mean higher prices—that is to say, higher prices than the goods are worth, if sold freely in the markets of the world.
I am quite ready to admit that the fact that you make a particular branch of trade more profitable, induces more people to engage in that branch of trade. That is what I call stimulating Colonial production through the agency of price. I am quite prepared to admit that a very small tax on staple articles would affect prices in a very small manner. Reference has been made to the imposition of a shilling duty on corn, and I think it was Mr. Moor3 who said, yesterday, that when the shilling duty was imposed prices fell, and when it was taken off prices rose. That may be quite true. I do not know that it is true, but it may be. The imposition of such a small duty as a shilling on a commodity produced in such vast abundance as wheat, might quite easily be swamped or concealed by the operation of other more powerful factors. A week of unusual sunshine, or a night of late frost, or a ring in the freights, or violent speculation, might easily swamp and cover the operation of such a small duty; but it is the opinion of those whose economic views I share—I cannot put it higher than that—that whatever circumstances may apparently conceal the effect of the duty on prices, the effect is there all the same, and that any duty that is imposed upon a commodity becomes a factor in the price of that commodity. I should have thought that was an almost incontestable proposition.
Here you have the two different sides of the bargain, the sellers and the buyers, the sellers trying to get all they can, and the buyers trying to give as little as they can. An elaborate process of what is called "the higgling of the market" goes on all over the world between exchanges linked up by telegraph, whose prices vary to a sixteenth and a thirty-second. We are invited to believe that with all that subtle process of calculation made from almost minute to minute throughout the year, the imposition of a duty or demand for £1,000,000 or £2,000,000 for this or that Government, placed suddenly upon the commodity in question as a tax, makes no difference whatever to the cost to the consumer; that it is borne either by the buyer or by the seller, or provided in some magical manner. As a matter of fact, the seller endeavours to transmit the burden to the purchaser, and the purchaser places it upon the consumer as opportunity may occur in relation to the general market situation all over the world.
That is by way of digression, only to show that we believe that a tax on a commodity is a factor in its price, which I thought was a tolerably simple proposition. What a dangerous thing it will be, year after year, to associate the idea of Empire, of our kith and kin beyond the seas, of these great, young, self-governing Dominions in which our people at present take so much pride, with an enhancement, however small, in the price of the necessary commodities of the life and the industry of Britain! It seems to me that, quite apart from the Parliamentary difficulty to which I have referred, which I think would tend to organise and create anti-Colonial sentiment, you would, by the imposition of duties upon the necessaries of life and of industry, breed steadily year by year, and accumulate at the end of a decade a deep feeling of sullen hatred of the Colonies, and of Colonial affairs among those poorer people in this country to whom Mr. Lloyd George referred so eloquently yesterday, and whose case, when stated, appeals to the sympathy of every one round this table. That would be a great disaster.
But there is another point which occurs to me, and which I would submit respectfully to the Conference in this connection. Great fluctuations occur in the price of all commodities which are subject to climatic influences. We have seen enormous fluctuations in meat and cereals and in food-stuffs generally from time to time in the world's markets. Although we buy in the markets of the whole world we observe how much the price of one year varies from that of another year. These fluctuations are due to causes beyond our control. We cannot control the causes which make the earth refuse her fruits at a certain season, nor can we, unfortunately, at present, control the speculation which always arises when an unusual stringency is discovered. Compared to these forces, the taxes which you suggest should be imposed upon food and raw materials might, I admit, be small, but they would be the only factor in price which would be absolutely in our control.
If, from circumstances which we may easily imagine, any of the great staple articles which were the subject of preference should be driven up in price to an unusual height, there would be a demand—and I think an irresistible demand—in this country that the tax should be removed. The tax would bear all the unpopularity. People would say: "This, at any rate, we can take off, and relieve the burden which is pressing so heavily upon us." But now see the difficulty in which we should then be involved. At present all our taxes are under our own control. An unpopular tax can be removed; if the Government will not remove it they can be turned out and another Government to remove the tax can be got from the people by election. It can be done at once. The Chancellor of the Exchequer can come down to the House and the tax can