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PROBLEMS OF EMPIRE. they sell their surplus abroad at or below the cost of production. In the debate in the House of Lords, Lord Lansdowne quoted figures showing that a German trade combination sold its production in the home market at 120 marks a ton, and sold its surplus abroad at 85 marks a ton. Against competition of this character, which is justly described as unfair competition, I hold the opinion, rightly or wrongly, that it is well-nigh impossible, at any rate it is exceedingly difficult, for British industry to hold its own on a pure free trade basis.

Now we come to the third ground on which reform in our fiscal policy is urged, to promote preferential trade within the Empire. In a paper read before the Colonial Institute, in November of last year, when I had not the remotest idea that this question would soon become one of practical politics, I showed what is in fact obvious, that a commercial federation which did not impose a tax on Russian and American wheat for the benefit of the Canadian wheat-grower, and on meat for the benefit of the Australian and New Zealander, would have been of little value to the Colonies. Mr. Chamberlain, in his celebrated speech in the House of Commons on May 29th, frankly acknowledged that preference must be given either on food or on raw materials, or on both. He then went on to say that 'so far as I can see it will not be necessary to impose any tax on raw materials.' A tax on raw material, which would cripple any British industry, is totally opposed to the spirit of Mr. Chamberlain's policy, and if it was ever contemplated by him, as it was by me, then I can confidently assert that it is not contemplated by him any longer. What is Mr. Chamberlain's policy? It is to impose a 152