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PROBLEMS OF EMPIRE. believe, prove to be the most critical in the history of British industry, and will settle the question one way or the other. It must also be borne in mind that a Commercial Federation which did not impose a tax on Russian and American wheat for the benefit of the Canadian wheat-grower, and a duty on other agricultural produce for the benefit of the Australian and New Zealander, would be of little value to the Colonies. Taxes on food supplies and raw materials are open to the gravest objection. The Colonial Conference has gone as far as it is possible to go at the present stage in the direction of Commercial Federation. The most extreme Free Trader can have no objection to the Colonies reducing their tariffs on imports from the mother country when they exact no pledge in return.

To turn to Defence. In the history of the Imperial Federation movement, nothing is more remarkable than the continuity of the idea that the most practicable step in the direction of Federation lies in a combination for defence. To deal with the question of Federation from this point of view would require a paper in itself. I have always held that the Colonies, in their present stage of development, cannot give substantial monetary assistance towards the general defence of the Empire, or, in other words, that no contribution which they can at present afford would substantially lessen the burden which the Navy and Army estimates impose on the British taxpayer.

At the recent Colonial Conference the following annual contributions to naval defence were suggested:— 80