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PREFERENTIAL TARIFFS. 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 commercial 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 arguments 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.

1. The burden of defending the Empire is becoming too heavy for the taxpayers of these 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 135