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sideration of the present Conference, also on the initiative of New Zealand. The first and the most important one is that a preferential tariff should be arranged in favour of British goods which are now taxable in the respective colonies and in the United Kingdom. And although no proposal comes to us from Canada, I am, of course, aware that similar questions have been recently specially discussed very actively and very intelligently in the Dominion, and that a strong opinion prevails there that the time is ripe for something of this kind. And therefore, with your permission, I would propose to examine this proposition, not in details, but so far as its general principles are concerned. In 1897 I would remind you that the Premiers then unanimously undertook to consult with their colleagues, and to consider whether a preference might not be given on their Customs tariff for goods imported from the United Kingdom. This was a proposal without any reciprocal obligation. It was regarded by the Premiers at the time as a proposal which might be made in consideration of the fact that the United Kingdom was the largest and the best and the most open market in the world for all the products of the colonies. But nothing whatever has come of the resolution up to the present time. No step has been taken to give any effect to it. That, I think, is due partly to circumstances which we could not have anticipated—partly, indeed, to the Federation of Australia, partly also to the existence of the war; but it is a question which, no doubt, may now be taken up with a greater hope of something coming from it. But in Canada, before the Conference of 1897, the Canadian Government had decided to give us a preference which then amounted to 25 per cent., and this subsequently was increased to 33J per cent. This was a preference voluntarily accorded by Canada on British taxable goods imported into the Dominion. Canada, therefore, has anticipated the general proposal of the Premiers, and the time which has elapsed has been sufficient to enable us to form a judgment of the effect of an arrangement of this kind, and I have to say to you that while I cannot but gratefully acknowledge the intention of this proposal and its sentimental value as a proof of good will and affection, yet that its substantial results have been altogether disappointing to us, and I think they must have been equally disappointing to its promoters. I shall circulate to you another paper (Appendix VIII.) which contains very fully the whole of the statistics showing the course of trade in Canada since 1897, and the results of the preferential tariff. But I may give you in a word or two the most important conclusions. lam comparing now the import trade of British goods into Canada in the year 1896-97 with the last year for which I have the returns —1900-1. The total imports of Canada increased in that period £14,500,000 sterling, and the rate of 62 per cent. That shows an enormously increased prosperity in the Dominion; it shows how the energy of its inhabitants is developing its trade. Fourteen and a half millions and sixty-two per cent. ; if you will kindly bear in mind those figures as showing the total result of all the import trade. Of that the free trade, upon which no duty is levied and upon which therefore no preference is given to British goods, increased £6,250,000, or at the rate of 67 per cent. The general trade—that is, the trade from foreign countries which came under the general tariff—also increased £6,250,000, or at the rate of 62 per cent. But the preferential trade—the trade upon which this advantage had been given to British goods, only increased in the same time £2,000,000, and only at the rate of 55 per cent. So that the rate of increase under the preferential tariff was actually less than under the general tariff, and also under the free tariff. Or taking it in another way, the total increase of the trade of Canada with foreigners during the period named—this is including both the trade subject to the tariff and also the free trade—was 69 per cent., while the total increase of British trade was only 48 per cent. Well, now, what is the cause of this ? Up to 1885 British exports steadily increased to the Dominion of Canada. Then the Government of the day adopted a very severe protective tariff, which by the nature of things, perhaps, specially affected British goods. We are not the exporters, as a rule, of raw materials or of food. We therefore do not export the articles which Canada freely imports. We export manufactured goods, and it was against manufactured goods that the tariff was intentionally, I suppose, directed. The result pf that was that there immediately set in a continuous and rapid decline in the importation of British goods into Canada. Now, the preference which was given in 1897 has checked the decline, but there is very little increase. Practically the checking of that decline is the whole result which we can recognise as having followed the generous intentions of the Canadian Government. Foreign produce at the present time in Canada has still a lower average tariff than British produce, no doubt due to the fact that the foreign produce is, as 1 have said, as a rule of a character upon which lower duties are ordinarily levied; but the result is that while foreign imports have largely increased, the British imports have largely decreased. But, now, I want to point out another thing which I think will be of great importance, and which I am sure the Government of Canada must have taken into their serious consideration. What return has been made to them by the foreigner for the advantage which the foreigner has derived from their tariff? The exports from Canada to foreigners have decreased 40 per cent., while the exports from foreigners to Canada have, as I have said, largely increased. On the other hand, in spite of the tariff, in spite of everything in the natural course of trade and communication, the exports to the United Kingdom have increased 85 per cent, in fifteen years, and the net result, which I desire to impress upon you, is that, in spite of the preference which Canada has given us, their tariff has pressed and still presses with the greatest severity upon its best customer, and has favoured the foreigner who is constantly doing his best to shut out her goods. Now, what is the present position ? I believe it is true of Canada —it is true, I believe, of every colony—we take already by far the largest proportion of colonial exports; but there is not the least doubt that we might double or treble the amount that we take, but we cannot do so until we have the reciprocal advantages, and until you take in exchange a larger proportion of our goods, and so enable us to pay for the imports which we should receive from you. And I think the very valuable experience, somewhat disap2—A. 7.