defiance of the preferential tariff treatment enjoyed since 1897, in varying degrees, by numerous classes of British products at the expense of the like products of American origin. The inference drawn by many persons from this state of affairs is that the proBritish tariff of Canada has been ineffectual. I am not prepared to accept this conclusion, but am strongly of the belief that the preferentials in favor of the goods of the mother country have actually exerted, especially since 1900, an important, although indeterminable, influence. In other words, I am of opinion that since British manufactures enjoyed a rebate of one-third the regular duties, the Canadian tariff has exerted a restrictive effect upon the normal growth of American export trade to that country, so that our share might have been in 1906 perhaps 75 per cent, instead of 61 per cent, if the trade of the United States had not suffered this differential treatment in competition with British industries.

But be this as it may, the table shows that Canada makes the bulk of her foreign purchases in the American market, notwithstanding the preferentials and the colonial or imperial sentiment. Commenting upon this state of affairs, the editor of the London Financial Times recently remarked that what has evidently been accomplished by the preferential tariff is a checking of the decline. in British exports to Canada which set in between the years 1892 and 1895, and in this respect, he thought, it has performed a service to British manufacturers. While this is undoubtedly true, some share of the credit for arresting the decline mentioned is due to British exporters who have awakened in recent years to the necessity of energetic efforts in order to maintain their hold on the Canadian market. I quote the following extract from the editorial referred to:

The geographical position of Canada, it is obvious, is a severe handicap to British manufacturers and a corresponding advantage to United States merchants. There is also what, perhaps, is too often overlooked here-the immense advantage given to the states by the approximation of social and economic conditions in the two countries. To so great an extent is this the fact that the manufacturers of the states can regard the Dominion as being in many of its requirements merely an extension of the home market and as not needing specialized lines or methods of production such as our manufacturers would in many cases have to undertake before they could hope to compete on equal terms. The big point in our own favor consists in the fact that we are Canada's principal customer, with the result that there is always

a large tonnage moving eastward and providing comparatively low freights for return business. Then we have the preferential tariff and that wider preference in good will which arises from our political connection and our ties of blood.

While the preferential tariff is a most important factor in building up trade between the Dominion and the United Kingdom, it is not difficult to account for the steady increase of imports from the United States. All our consular officers stationed in Canada agree that American goods are held in high favor as respects quality. In a recent report Consul Van Sant, of Kingston, says that in the long run, notwithstanding the keenest competition and sentiment, the natural advantages in geographical position and common commercial interests and tastes seem to count favorably, and the importation of manufactures from the United States continues to lead. In order to hold this position, he cautions the American exporter to watch the situation and to meet every new wave of industrial competition by extending fair trade inducements to Canadian merchants who buy abroad. Consul Van Sant also makes the gratifying announcement that there are no complaints against American packing methods in his district, and that the usually admitted superiority of American goods and their quick transit across the border, along with the low average of breakage and damage, have aided largely in bringing about the leading trade position enjoyed by the United States. It would seem that these considerations explain the apparent failure of the preferential tariff to accomplish what its framers claimed for it.

In several important lines of manufactured goods the United States enjoys in the Canadian market an apparently securely entrenched position notwithstanding differential tariff treatment in competition with the industries of the mother country. It may be of interest to note a few of these industries in which the United States is strongest and the United Kingdom weakest. Such are agricultural implements and machines, tools and hand or machine. implements, portable machines and parts, locomotives, railway cars, copper manufactures, electrical apparatus, and iron and steel manufactures. In some of these classes of Canadian imports the share of the United States is as high as 90 or 95 per cent, thus giving a virtual monopoly. This position is likely to be maintained indefinitely, excepting in so far as modified by the growth of domestic

manufactures, including the Canadianized American plants, to which I shall presently refer.

On the other hand, the classes of manufactures in which our British rivals have been aided materially by the preferentials include the miscellaneous metal trades, hardware, cutlery, jewelry, etc.; textiles; waterproof clothing; leather goods; steam engines and boilers; some kinds of iron and steel, particularly pig iron; and earthenware. In all these lines the gain of Great Britain seems to have been at the expense of the United States. Still other British industries that have been benefited by the preference are hats, caps, and bonnets; drugs, dyes, and chemicals; china and porcelain; and cement, although in these classes the trade of the United States has kept pace with the increase in the Canadian demand and has generally increased more rapidly. At any rate, the classes of manufactured goods that I have enumerated in this paragraph are those in respect of which we have good cause to apprehend increasingly keen competition from the mother country as a direct result of the heavy tariff preference.

The following interesting tables, showing the general course of Canadian trade from 1884 to 1905, were compiled by the CanadianTariff Commission in 1907. While some of the percentages are slightly different from those I have given above, the discrepancies are due simply to taking total imports in one case and total imports of merchandise for consumption in the other:

TABLE A.-IMPORTS INTO CANADA: PERCENTAGE DERIVED FROM DIFFERENT

According to the above table the imports into Canada from the

mother country fell from 40.1 per cent in 1884 to 23.6 per cent in

1905, while those from the United States rose from 46.7 per cent to 60.7 per cent in the same period.

TABLE B.-EXPORTS FROM CANADA: PERCENTAGE TO VARIOUS DESTINATIONS.

It appears from the foregoing table that the exports from Canada to the mother country rose from 46.9 per cent in 1884 to 50.6 per cent in 1905, while, in the same period, those to the United States declined from 43 per cent to 37.4 per cent. It should be borne in mind, of course, that this is simply a statement of respective shares expressed in percentages, for Canadian exports to the United States have, as we have seen, increased to a formidable figure. What the table does show, however, is that the mother country was buying more, relatively, and the United States less, relatively, in 1905 than in 1884 in the Canadian market. On the principle of natural reciprocity in trade-that a nation should buy where it would sell the percentages of the Tariff Commission seem to me to point a certain moral and to be pregnant with meaning, the trend of the second table (B) foreshadowing a different story for the first table (A), when they shall be recast a few years hence.

The statistics that I have presented show, I think conclusively, that the pro-British tariff has failed to accomplish the divergence in international trade which its founders and advocates anticipated; but it would be unwise to minimize its importance, for the time may come when tariff differentials against American goods of 331/3 per cent, or even 25 per cent, will suffice to ruin our export trade to the Dominion. There is no partisanship in the proposition that the continuance of our industrial prosperity is essential to the continuance and progress of our foreign trade. If the present halcyon period were to be succeeded by one of depression and stagnation,

all experience indicates that foreign tariff restrictions against American products that are now, on the impulse of the waves of prosperity, overridden without much difficulty, would become stone-wall obstacles. It therefore should be a matter of general concern to understand precisely the character of the Canadian tariff system.

Prior to 1897 Canada, like the majority of countries and colonies, employed the single tariff system. In that year the Parliament of the Dominion adopted a double tariff, consisting of the regular tariff and the preferential tariff in favor of the mother country and reciprocating colonies. During the first year the reduction allowed as preference was only 121⁄2 per cent; but by the terms of the original law (May 13, 1897) this was increased in 1898 to 25 It remained at that figure until July 1, 1900, when, by an order previously made in council, it was increased to 33' per cent, and this continued to be the uniform reduction in duties on imports from the United Kingdom and reciprocating colonies (mostly in the West Indies) until the triple tariff of 1907 went into effect. While the Canadian tariff during the period 1897 to 1907 was virtually a double tariff, like the maximum and minimum tariff of France, it was a single tariff in form, with a single schedule of duties applicable to all foreign countries alike, the provision for preferential treatment within the British Empire being a separate feature of the law.

The apparent ineffectiveness of the British preferentials was the principal reason for the revision of the tariff in 1907 on an entirely new plan, which bids fair to have far-reaching results. In preparation for the revision a tariff commission collected a mass of evidence in 1906 in the different industrial centers, both in the Dominion and in England, as regards the effect of the then existing uniform preference of 331/3 per cent and the needs and wishes of the business interests concerned. As adopted by the Canadian Parliament, the new tariff consists of three schedules of duties on the same articles published in parallel columns, thus making the system a unique triple tariff. These columns are headed respectively "British Preferential Tariff," "Intermediate Tariff," and "General Tariff."

The rates of the "General Tariff," applicable to the United States, are not radically different from those of the old tariff. The average ad valorem rate of duty collected in 1906 on total dutiable imports from the United States was 24.8 per cent, and on total