A.—6a

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to it, and also make a statement on certain other items of tariff preference, which have been a matter of discussion informally outside the Conference. Mr. Massey : Where you propose, to apply preference ? The Chairman : Where; we; propose to apply preference. Food and Materials Committee Report. I think it woulel probably be convenient if I took tho Food anel Materials Committee first, because the object, of that Committee was to consider certain possible alternative suggestions which were put forward in the speech of the Prime Minister of Australia. We; had a Committee, representing all the delegations at the Conference, which went very fully into the; three questions raised, and the report of that Committee is unanimous. The three methods that we were asked to consider were the method of subsidies, the method of import licenses, and the- method of the, stabilization of prices. The Method of Subsidies found to be impracticable. The Committee considered the question of subsidies first, anel in considering that we; were, considering the question of the possibility of a grant by the Home Government of direct subsidies to Dominion producers-. The Committee found that to be impracticable for several reasons. In the first place, the grant of a subsidy of that kind involved the right —indeed, the necessity of retaining the right—of the Government granting the subsidy to exorcise a large measure; of supervision and direction over the recipients of the subsidy, and they were; unanimous in thinking that it woulel obviously be impracticable for one Government to elo that within the jurisdiction of another. There was also the que;stion of whether it was practicable, if a subsidy was to be considered at all, to make that subsieiy vary with the preferential rebates accorded to United Kingdom products. That appeared to the Committee to be impracticable because you could not get an accurate; measure of the money value ; because any subsidy would have to be constant, and therefore you coulel not make your subsidy depend upon a variable factor ; and because even if the proposal were attempted while the direct financial benefit of the, preference would be going to an individual trader the money to pay the subsidy would be coming from the taxpayers generally. It was also clear that a differential subsidy of the kind suggested might operate very unfairly as between one Dominion and another. You might have two Dominions giving exactly the same rate; of tariff preference, but by reason of there being a keener competition in one market than in another the actual benefit obtained by the same rate of preference woulel vary in the different Dominions, although the, rate; of preference accorded was the same. Finally, it was clear to the Committee that a system of direct subsidies of this kind would have no limit once it was accepted in principle, and would impose financial burdens which would be too great to contemplate. Method of Import Licenses and Stabilization of Prices : Some Difficulties. Then we considered the two either suggestions, the question of import licenses and tho question of a Purchase Board to effect the stabilization of prices. The Committee went very carefully into that, and they came to the conclusion that they had really to take these, two things together, because a system of prohibition anel license would involve the establishment of a State Purchase Board anel price-control. They considered prohibition anel license, and they felt bound to report against it for the following reasons : At the, Genoa Conferene;e very careful consideration had been given to the question of prohibition and license, and there was a unanimous resolution of that Conference, which was supported by the whole of the British Empire Delegation, that the system of prohibition and license ought to be avoided if any other system was applicable. Operation of System would produce Uncertainty of Trade. The reasons which led us to endorse that resolution at Genoa were the reasons which weighed very strongly with the Committee on this particular reference. One of the reasons was the tremendous uncertainty in trade. If you have a tariff, everybody knows what the tariff is ;if you have a prohibition and licenses, nobody knows, and the result would be that, you woulel have great difficulties in getting your supplies, and great difficulties in obtaining shipment. Certainly, it woulel be- impossible to rely on getting the delivery of supplies promptly on the' issue of a license, and the very people whose production you were- trying to restrict by a system of prohibition and license woulel be, naturally, the; first to take advantage of any artificial shortage that might occur if they could profit by holding up their deliveries. Therefore we felt that it was impossible- to count on obtaining, at the moment they were needed, either the precise amount of the supplies or the means of shipment. A Licensing System would necessitate a Single Importing Agency. Then, again, all our experience,—and we have not only the experience of the United Kingdom but the experience of other Dominions who tried to run licensing systems—wont to show that it was elifficult, and indeed impossible, with the best will in the world tei administer a system of licensing fairly between a number of different applicants. Unless yem had one single importer you would always be charged with having discriminated between one importer and another. So great is that difficulty that it was felt that if you adopted a system of this kind you woulel be forced ultimately to form a single importing agency, which, indeed, was the- proposal or suggestion of tho Purchase Board. Other Objections to a Licensing System. There was another point: The effect of a licensing system, like the effect of an import duty if it were so high as to exclude, all goods that would not come in except under the license, would be to