1865 - Vogel, J. Great Britain and her Colonies - [Text] p 3-32

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  1865 - Vogel, J. Great Britain and her Colonies - [Text] p 3-32
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Relations undefined.

English feeling in the colonies weakened.

Doubtful whether Great Britain derives any

THERE are not wanting signs to indicate that Great Britain will soon have to consider as a serious question the relations that exist beween her and her colonies. At present these relations are vague, shadowy, and undefined. They are scarcely based on mutual interest. They depend more upon sentiment--sentiment that very trifling circumstances may upset. The material benefit of the connection as yet is on the side of the colonies; and on their side, perhaps, the sentiment is least to be relied on. As fresh generations spring up the personal feeling of attachment to the mother country weakens. The words "at home" no longer mean Great Britain; in course of time only a very small proportion of a colonial population will be able to boast of having even visited the mother country. On the other hand, the pride that England naturally feels in the children of her creation--her colonies--is constantly liable to the harshest of all tests--the cui bono. Hitherto, when the question has been asked, what good England derives from

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benefit from her colonies under present relations.

If colonies separated from the mother country, they would still welcome her surplus population.

her colonies, it has been customary to answer by a justification of the past. Owing to her active spirit of colonization the trade of England has been immensely increased; in making the colonies England has made the trade. Granted; but this amounts only to a justification of the past. When some statesman comes forward to question England's present relation to her colonies, he may make a present to his opponents of the past. He may admit that the vast sums hitherto spent have met with adequate return; but he may still ask, is it worth spending more or continuing a relation from which the party most benefited may withdraw whenever it suits his convenience. He will ask, does the mere fact of England's political relation to her colonies cause the latter to consume more of her goods--in other words, suppose the colonies were set free, would the trade between them and the mother country diminish in consequence, and if so, would the extent of the diminution be worth purchasing by a prolongation of the relations?

It is to be remembered that the arguments of those who uphold the present colonial system are mainly addressed to the points, that the colonies afford an outlet for England's surplus population and for her manufactures. These reasons are very weak. In regard to the first, there can he no question that if the colonies were cut adrift, they would still eagerly welcome immigrants from all parts of the world. The United States have long since severed their connection with Great Britain,

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but they have never refused to receive her surplus population.

Because of Great Britain's connection with her colonies, she derives no commercial advantages.

Colonies show her no favour, and do not adopt her treaties.

The second argument is, if possible, weaker. The colonies simply consume those manufactures of Great Britain that suit them. They do not show, nor do they feel there is any claim on them to show, the least preference for the manufactures of Great Britain. They are as unsparing in taxing her goods through the customs as those of any other country. Nay, in this respect the mother country occupies a worse position in relation to her colonies than she does to foreign countries. With these she enters into treaties of reciprocal free-trade, but the colonies feel themselves at liberty to espouse protection to any extent that suits the crotchets of their public men. If Victoria and New Zealand were foreign countries, Great Britain might probably respond to their protection tariffs by reminding them that some of their exports are admitted duty free. We shall have again to refer to the tariff question, but in the meanwhile it is hardly necessary to enlarge on the argument, that whatever the past commercial advantages Great Britain may have derived from her colonies, she derives them no longer because they are colonies-- she would derive as much, if not more, if they were independent countries.

The colonial idea of free trade is simply the putting of Great Britain on an exact equality with other countries. Neither her ships, her goods, nor her people are treated with especial favour. Her

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treaties are not considered binding on the colonies, as for instance, though Great Britain has been fighting in China for the right of ingress to that country, a capitation tax has been imposed in Victoria on the Chinese. If some outlying province of the vast Chinese empire attempted to treat Englishmen as the Chinese were some time ago treated in Victoria, Great Britain would feel herself justified in ravaging it with fire and sword.

On the other hand, colonies sources of weakness to her.

But if England derives no advantages from her colonies, much may be said on the other side. They are so far sources of weakness to her, that in times of peace they absorb a considerable portion of her army, and in times of war they would be so much more territory requiring her protection. Again, they draw a great deal of money from the mother country in other ways than for their ordinary military protection; and whenever they chose to make it, they deem they have a sort of claim on Great Britain for assistance. They give no return. They consider they have the right either to assume on their weakness, or to rely on their strength and threaten secession.

They even, to some extent, constrain her.

The transportation of two or three hundred convicts yearly to West Australia has brought on Great Britain the scarcely veiled threat from Victoria of secession. New Zealand trades, to some extent, on her weakness--she complains of not having sufficient power, and tells England to take away the troops if otherwise she be not allowed to do as she likes. But this is a threat in a

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form that apes humility. If Great Britain moved the troops from New Zealand, the latter would plead her weakness as a cause for violating the treaty obligations which England has entered into with the natives. The colonists would sooner or later wage a war of extermination. The Maories would be driven from their lands; and when Great Britain, scandalized by this result of her philanthropic colonizing, would ask the reason, the answer would be, you have forced it on us. Then in Northern America the steps which are being taken to form a Federal Union, have as one contingent, though veiled object, the right to demand of England a large amount of assistance as an alternative to secession.

Difficulties that may arise owing to Great Britain having allowed her colonies to fix their own tariffs.

That very question of customs' duties is a looming cause of danger to the relations that exist between Great Britain and her colonies. On all sides it has become the fashion to make commercial treaties between different countries. The colonies will not be allowed for long to remain that sort of no-man's-land which they are at present in regard to their relations with the rest of the world. It is some years since one of the judges in South Australia strongly asserted that the Colonial Customs' Acts should be reserved for the royal pleasure, as they involved questions of national policy. The opinion was overruled simply because the colonies would not submit to allow Great Britain to regulate their tariffs, she, with a singular want of foresight, not having retained that power

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when she made them quasi-independent entities. But there can he no doubt the South Australian judge was right. It is true the commercial treaties into which Great Britain enters are mostly, if not always, limited to the United Kingdom. But is it likely it will escape the attention of foreign countries that the colonies are becoming large consumers of some classes of their goods, and that it would be desirable to bring them within the range of the reciprocal obligations that have been found to work well elsewhere. Then the question will be addressed to Great Britain, is she prepared to enter into engagements on behalf of her colonies or to allow them to enter into engagements with foreign countries on their own behalf? The answer in each case must be, No. She cannot allow them to enter into engagements with foreign countries, because in doing so they would be pledging the empire to responsibilities. The contraction of such engagements would argue the possibility of disputes, and the very nature of the relations between England and her colonies would convert their disputes into her own.

Practically colonies are excluded from the operation of commercial treaties.

Then she could not assume the right to enter into engagements on their behalf. She has told them protection tariffs are very stupid, very impolitic, but has allowed them to impose them. And if she now attempted to forbid them, she would be told she was interfering with vested interests. She would have then to reply to a foreign country that desired to include her colonies in its

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commercial polity, that such a thing was impossible. She could neither sanction a direct negotiation, nor undertake an indirect one, with any chance of success. Then would come the answer --you are practically evading your treaty obligations in shutting out from the operation of commercial treaties so large a portion of your dominions as the colonies comprise. The French include Algiers in their commercial treaty obligations; might they not ask why in New Zealand the duty on wine is four shillings a gallon, whilst the treaty stipulates for its admission into the United Kingdom for one shilling; on brandy twelve shillings, whilst the treaty stipulates for eight and twopence.

Not in the nature of things that, with the discretion they possess, colonies will always conform to imperial policy.

We have already incidentally referred to the differences that have arisen between Great Britain and Victoria and New Zealand. But without going into specific instances, it seems that one can almost regard differences of the kind to be the inevitable consequence of the mother country having given to her colonies discretionary powers, with limitations ill defined, if defined at all. It is not in the nature of things that colonies legislating independently should altogether adhere to imperial ideas. There is a constant tendency towards an encroachment upon imperial rights, and against this tendency there is no adequate check. The Australian colonies, for instance, are drifting into protective tariffs--are doing their best to cripple the trade to create which Great Britain has spent such vast sums, and to continue which she still undertakes

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her colonial responsibilities. Nay, the colonies may even venture to put a pressure on Great Britain, which she in return would not dare to put on them. It is difficult to conceive anything more defiant than the pressure put by Victoria on Great Britain to stop transportation to Western Australia. But the very success the colony has met with, will incline other colonies, when differences of opinion arise, to a like course.

Great Britain legislates only for the present.

A far-seeing policy not natural to a Constitutional Government.

It is almost an essential part of the policy of Great Britain to legislate only for the present--not to anticipate possible difficulties, to wait till they arise. Perhaps this is a policy inseparable to a great extent from the nature of her Government. It can frame no laws, or follow no policy requiring the sanction of laws, without a full and open discussion. A despotic monarch can work for years for a secret object. To have to ask sanction for his operations would be to disclose their object, and frequently therefore to defeat it. But the British public are introduced behind the scenes at every meeting of Parliament; Ministers are allowed to leave little undisclosed. No doubt this has operated to prevent the passing of an imperial measure regulating the relations between Great Britain and her colonies. In proposing it, it might have been necessary to point out and discuss the cause that dictated it--the possible future contingency of the colonies desiring to secede, and the bare mention of the possibility might have suggested its realisation.

Responsible Ministries

But this is an explanation, not a plea in justifi-

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hesitate to interfere with subjects of not immediate moment.

cation. The avoidance of disagreeable subjects is a distinguishing trait of constitutional Governments. Not to tread on unnecessary debateable ground is one of the instincts of preservation of responsible ministries. Dare any one expect English ministers to enter into the question of the relations between the mother country and her colonies in a pure spirit of far-seeing philanthropy? To perhaps risk their position merely to provide for ills to come--their supporters would deem them mad. And yet men removed from the strife of politics may well come to the conclusion that the relations between the mother country and the colonies should be defined and understood.

When difficulties arise between Great Britain and her colonies too late to discuss subject calmly.

When a question of dispute arises it will be too late to calmly discuss the subject in its broad bearings. There will be bitter humiliation in store for the mother country if she do not either draw her colonies closer to her or else define the conditions upon which she is prepared to relinquish them. Under their present relations it is inevitable that sooner or later the demand for secession will be urged by some of the colonies. What happened in America will happen again. As long as the colonies do not understand the limits of their powers they will be likely to overstep them, and the moment England makes a stand they will threaten secession.

The time has come for Great Britain to consolidate her Empire, and strengthen the ties between

What the writer asks is that Great Britain should again draw her colonies towards her. She has alienated them for the last few years. Separate interests have grown up. Let a community of

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her and her colonies by supplying them with capital.

interests be once more established. The colonies languish for want of capital, and Great Britain assists them not. Millions of money are forthcoming for the enterprises of foreign countries. The colonies get money at great disadvantage. Why has California advanced more than Victoria? because California is a part of the United States, Victoria only a dependency of Great Britain. With a few strokes of the pen Great Britain could give to investments in the colonies a security that would attract to them the gold and enterprise of her subjects, now so sparingly and so doubtfully directed towards them.

The money her subjects supply to foreign countries fetters her independence, and acts as a check upon her foreign policy.

The money which Great Britain invests in foreign countries becomes, to some extent, a source of weakness to her. It operates more or less as a check upon her foreign policy. The individual interests of a portion of her subjects are at stake. The holders of foreign stock, as a rule, represent an influential portion of the community. War with a country of which they are creditors they know means the depreciation of the securities they hold. There is thus always an internal pressure exercised which fetters the foreign policy of Great Britain. It may be argued that if foreign loans keep the United Kingdom from war, they act as a safeguard. But they do not so much keep her from war as destroy her independence. Their pressure is brought to bear before war is imminent; it is exerted to arrest that bold and outspoken tone that might lead in the direction of war.

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Undue accumulation of wealth leads to decline of nations.

It is an old tale, old as history, old as nations,--a plethora of wealth creates undue anxiety for peace. Undue anxiety for peace encourages an aggressive policy on the part of other states. Then comes the decline in the scale of nations, then the decline in the nation itself. The undue accumulation of wealth is bad enough when it excites only fears within the country in which it is invested. But when to those motives of fear are added the widening ramifications of alarm for the country that threatens hostilities, the threatened nation has an enemy within the gates--a section of its community is the ally of its opponent. It is Great Britain's own wealth in alien hands that is now compelling her to keep up the war expenditure that is her sorest burden.

Great Britain's colonies should be the receptacle of her surplus capital.

But if she encouraged, by simply affording reasonable security, the flow of her subjects' wealth to her colonies, she would be creating nations to act as her allies in times of danger--to afford her that security from aggression that indisputable strength supplies. Amongst England's colonies are countries that only want capital to convert them into great nations. Where capital exists, there labour is sure to follow. The surplus population of Great Britain that now presses on her resources would in the colonies reproduce her greatness. Her non-consuming starving sons and daughters would become consumers in the colonies and increase her trade. She would in fact be recurring to her old ideas of colonization--opening up the outlets of an enlarged

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Instead of leaving them to a slow process of development, she should lend them the whole weight of her power.

commerce. There would be an end to the protection doctrines of struggling colonies, if the flow of wealth to their shores enabled them to develop the natural resources with which Providence has gifted them. Under a judicious system of supervision there are some of the colonies which it would be impossible to feed with too much capital. The case as between the plan proposed and the one in operation, is this--should Great Britain allow her colonies to develop themselves, assisted only by a small amount of speculative capital provided at a high rate of interest? Should she allow them to toil their way to ultimate success through a struggling period of vicissitudes and difficulties, or should she lend the whole weight of her might, her power, her wealth, to rear them as rapidly as possible into great nations--should she allow them to grow up stranger communities, or make them breath of her breath, life of her life? There is no danger of the colonies becoming estranged, if the colonists owe to the great body of the people at home the capital on which they are working their way to wealth.

Colonial creditors have no ostensible security.

What plan would we propose? it will be asked. Before detailing it, let us first consider how very undefined is the nature of the securities that the colonies offer to their public creditors. In the event of a colony repudiating, what could the creditors do? If a foreign country owes British subjects money, they can appeal to the Foreign Office, and if the nation be not over strong, they

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may reasonably expect that a menacing attitude will be adopted to enforce their claims. But if a colony is their debtor their only ostensible recourse is the ordinary courts of law,--a recourse which is no remedy, for to recover from a Government by legal process is a plan few would be bold enough to attempt. But if we look a little beneath the surface we shall see that a real remedy underlies the ostensible one.

In reality Great Britain guarantees colonial indebtedness.

Substantially Great Britain does guarantee colonial indebtedness, for, if necessary, her power would be at the command of the creditors. But because she is an undisclosed guarantor she reaps no benefit, whilst the colonies have to pay an exorbitant price for the little money they obtain.

Neither she nor her colonies derive the advantages they should from the guarantee, because it is undisclosed.

The term "undisclosed guarantor" is not a figurative expression. The colonies derive their power from the Imperial Parliament, and although they borrow on their own responsibility there is room to conclude that, at the bottom of the little credit they command, lies the conviction that in case of need the assistance of the Imperial Government would be available to those who had to complain of their failing to keep their engagements. In reality this places the mother country in the position of an undisclosed guarantor. She gets nothing for this responsibility, nor do the colonies derive any direct benefit from it, further than its possible operation in support of the limited amount of credit they enjoy.

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Colonies ought to subscribe toward: the expenses of the Imperial Government.

Could do so if Great Britain guaranteed their loans. By a small annual percentage could in time pay off the national debt.

The colonies ought to subscribe to the machinery of government of the United Kingdom, if it were laid down in law as it is in fact, that that machinery would be available for colonial purposes. It must be remembered if the colonies be regarded as forming, with England, one grand federation, that the action taken with any one colony, even though it were of an antagonistic nature, in so far as compelling it to meet its engagement, would be for the benefit of the others. If Great Britain proclaimed itself liable for the indebtedness of the colonies by undertaking to make them meet their engagements, they could obtain money at the same rate of interest that the Imperial Government could, 1 and would be able to afford to pay a small per-centage as a guarantee. That would be their contribution to the expenses of the imperial country; and astonishing as the assertion may seem, it could be made to swell up in the course of a hundred years without pressing upon the colonies to an amount sufficient to pay off the national debt. Let not our readers start in amazement or refuse to examine into the possibility of the suggestion. We repeat, a small guarantee per-centage would accumulate in a hundred years sufficiently to pay off the national debt of Great

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Britain, whilst the colonies would be converted into nations sufficiently powerful and wealthy not to feel the pressure of the debt which would have become divided amongst themselves.

Illustration by way of proving the principle laid down.

This is no hastily stated conviction. It is one which will stand the test of precise figures, and more by way of illustration than with the desire to enter into details (for the object of the writer is rather to suggest than to create), we propose to subject it to a close examination. To do so it will be necessary to fix upon amounts as a basis upon which to work out results. It may be found that the amounts and dates fixed are not the most judicious, but if the principle be correct, it will work in the same direction, though its practice be modified. The following, then, are the elements of our calculation. The normal rate of interest at which we suppose the Imperial Government can raise money we set down as three and a-half per cent., and the guarantee to be charged the colonies we put down as a-half per cent, annually. This would give the colonies money at the rate of four per cent., or fully one per cent, under the price at which their most favourable loans have been negotiated--or about one and a-half per cent, under the ruling price of the majority of their loans.

Colonies be content to borrow money during the next 100 years, at four per cent.

The colonies might be well satisfied with arrangements that promised them money for the next one hundred years at four per cent.; or supposing the Imperial Government could obtain it for less than three and a-half per cent., at a rate

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35,000,000l. to be advanced every five years.

Half per cent, guarantee annually would amount in 100 years to 855, 253, 059/.

of only one-half per cent. more than the Imperial Government had to pay. To secure uniformity it would be necessary the advances should bear one rate of interest; the premium and discount would be the profit or gain of the colonies. Well, then, the rate of interest, we suppose, is three and a-half per cent., and of the guarantee one-half per cent. The money to be advanced we propose should be thirty-five millions sterling every five years for one hundred years. Now, we want to ascertain what the half per cent, guarantee would amount to at compound interest during the time mentioned. We suppose it to be re-invested of course at the same rate of interest--three and a-half per cent. It would, in fact, as it accumulated, be available for the periodical advances. It is simple, though somewhat tedious, to work out the result. On the first thirty-five millions, the half per cent, guarantee would accumulate at compound interest for the whole term of one hundred years--on the second thirty-five millions, it would accumulate for ninety-five years; on the third, for ninety years; on the fourth, for eighty-five years; and so on till the twentieth instalment would have only a five years' currency of compound interest. A table of the results will be found in the appendix. The amount to which the half per cent, will accumulate is calculated on each separate instalment, and the result shows that, at the end of one hundred and twenty years, Great Britain will be the gainer by 855,253,059l.

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Process by which the result would be brought about.

It will be asked what will have become of the money, what will Great Britain have to show for the amount which we contend it will have gained. Its position will be this--it will have become the colonial creditor for the whole amount of the twenty instalments of thirty-five millions, or of 700,000,000l., and the balance of 155,253,059l. will be waiting investment. The process that will be going on will be this. The first seven instalments Great Britain will have to find--will have to raise by her direct guarantee. The next instalment will be more than met by the accumulated interest of the half per cent, guarantee. Gradually decreasing portions of the next five she will have to find. But for the rest of the time she will not only out of the interest be able to meet the instalments, but a surplus will accumulate, out of which she will be enabled to redeem the first instalments, and so convert the colonies into debtors for these amounts to herself, instead of to those who originally advanced them. 2 Precise calculations can be made, so as to

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ensure that the times of repayment of the first instalments should suit the accumulations of the guarantor. It would stand thus then--for the first seven instalments and for part of the ninth and four following ones the imperial country would become the guarantor to the third parties advancing, thenceforth she would be able to meet the instalments herself, and gradually to pay off the third parties who advanced the first instalments--standing herself in their place--still charging the half per cent, guarantee, but in reality guaranteeing only herself.

Data selected by way of illustration. Principle the same, if found preferable to select other figures.

Let us again remark that these results are approximate. We do not profess to lay down that the advances should really amount to 35,000,000l. quinquennially, or that one hundred years should be the exact limit of the transactions. We have used these figures as an illustration of a principle, to show that the mother country by feeding the colonies with capital, making a charge of only half per cent, for guarantee, would in a short time make a sufficient profit to pay off her own national debt. Accepting our illustration, it will be seen that at the end of the hundred years England would he a creditor of her colonies to the extent of 700,000,000l.

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with 155,253,059l. waiting investment. Her own national debt would still exist, but the Chancellor of the Exchequer instead of having to provide the interest for it from home resources, would be able to meet it from the interest derived from the colonies.

As calculation provides only for annual investment, a margin is left to cover expenses.

Risks so largely diffused, that practically profit safely secured.

It will be as well to meet some of the objections that will possibly be raised. It will be said that our calculation pre-supposes the investment of the half per cent, guarantee the moment it falls due. The answer to this is, that it supposes its investment only annually; that the interest will be paid in the colonies, and that the representatives of the mother country who will receive it, will have no difficulty in obtaining some interest on it at call, until they are prepared to advance it on colonial indebtedness. As the interest will be payable quarterly, and according to the calculations, be invested annually, there will be an average of a half a year's interest gained, which may be considered a margin to cover expenses. Then it will be asked, may not some losses be incurred, and might not one loss swamp the whole profit. The reply is, the money will be so widely distributed, and so many colonies will compete for it, that the mother country will be enabled to exercise a considerable amount of discretion in the selection of her investments. Large as the amount we suppose her to lend, she will not have to search for investments. She will have to select from those offered to her. We shall see this when we come to consider directly how the

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colonies will employ the money. But, before we turn to the colonial aspect of the case, let us first answer a question that will he raised--how will the plan suggested operate to prevent the conflicting interests between England and her colonies, the growth of which we made the starting point of our argument, that the relations between them required readjustment?

The discretion the mother country would exercise would be a hold on the good behaviour of the colonies.

If the whole of the money were to be given to one colony, we should have to allow that Great Britain would he putting herself into a position from which she might have to pray for rather than to concede terms. But the money would be divided amongst forty or fifty colonies. These would be the competitors, and the strongest guarantee of their good behaviour would consist in the fact that on it would depend the response to their demands for capital. In the very number of the nations Great Britain would he creating would lie her security against the aggressive tendencies of any particular one. Again, in the prosperity that would inevitably attend the employment of so much capital, would be found a guarantee against the indulgence of pernicious political crotchets. As we will see directly, there will also be so much private capital invested from home, that there will be a constant revival of the personal relations between the inhabitants of the mother country and those of her colonies.

There would be an end to the mischie-

The tendency in the colonies now is to separate from the imperial country, because she has thrown

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vous action of colonial public men.

Conservatism would grow up.

them on their own resources. But then the tendency would be to rely on the mother country for the supply of the means whereby to develope their resources. Besides, it would be a mistake to suppose that political pursuits have taken a firm hold on colonial communities generally. Public men are not, as a rule, the leading men of a colony. A very large section of the people look down with indifference approaching to contempt upon those who make political life their object. They neither interfere for nor against. They see no inducements to enter political life, and no inducements to restrain those to whom public life becomes a professional pursuit. All who have been in the colonies will bear out what we say. A large number of those whose position and intelligence would entitle them to take a lead in political life abstain from entering into it. And to a great extent they are the thoughtful men of the community. They watch, but interfere not. But if a new order of things were established; if a community of interests were to grow up between Great Britain and her colonies, and between her colonies themselves, there would not be wanting men who would have the power, as they would have the will, to control the mischievous action of political incendiaries. In short, conservatism would be of very speedy growth in the colonies if the mother country would allow the colonists to feel they had something to conserve.

Plan suggested would suit the colonies.

Let us now turn to the colonial aspect of the case. It will first be urged that low as the rate of

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Practically the colonies would be manufacturing their own capital.

interest four per cent, may be, it will not pay the colonies to be forced to borrow for a hundred years. Our answer is, our plan requires nothing of the kind. For convenience sake we suppose a continuous investment; but there is nothing to prevent the loans being of short dates, and their renewal in some other form. There might he a constant repayment and constant reinvestment going on. At the same time we may conjecture that possibly the colonies may soon come to think that the repayment of loans by sinking funds is a miserable financial policy, and that for really reproductive works there could be no possible objection to perpetually funding the cost. This is, however, a collateral question. It is sufficient to say our plan would chime in with the present system of colonial finance, should a more enlightened one not take its place. It will also be said that though we have claimed our plan will feed the colonies with capital from the mother country, in reality it only amounts to feeding them with their own. That, in fact, at the end of the one hundred years, the whole amount of their debt will be represented by the interest they will have paid. Such in reality is the logical rationale of the process. All that we ask for the colonies is the use of the capital they reproduce. But we call it capital from the mother country because at present that reproduction does pass into that form. As an instance, there is a three million loan authorized in New Zealand to run for fifty years, bearing partly a five and partly a six per

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cent, rate of interest. The money that will be paid by the colony in the shape of simple not compound interest during the currency of the loan will amount to 8,500,000l. If calculated at compound interest, it would multiply to an enormously larger extent. That represents the interest paid by the colony for the three millions of home capital advanced. What we ask for is simply a constant reinvestment of only a small portion of the interest--the half per cent, guarantee--within the colonies.

Purposes to which the loans should be put.

Let us now briefly allude to the purposes to which the money can he put. They must be essentially reproductive. That must be an invariable condition, in other words the expenditure of the money borrowed must afford security to the lender. Keeping this stipulation in mind, there should be no objection to colonial Governments undertaking many enterprises, or finding the money for them that are now left to private energy. In every case the colony borrowing would have to become directly liable, not only for the debt, but also for the faithful employment of the money on the purposes for which it was lent. It would be a matter for the colony's own consideration whether the local Government itself should direct the expenditure, or whether the same should be deputed to municipal bodies, or to legally constituted trusts, or commissions. In every case the Government would have to exercise that amount of supervision necessary to ensure the legitimate employment of the borrowed money, and would be liable for repay-

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ment. There is scarcely any limit to the reproductive works that might be constructed under the conditions named. Roads, railways, water and irrigation works, gas works, plantations, improvements of harbours, river clearings, and embankments, canals, telegraph lines, fish breeding ponds, patent slips, bridges, and a host of others that will readily suggest themselves to people who only consider this that as yet the colonies are almost deficient in large reproductive works. It is by no means suggested the Colonial Governments should compete with private enterprise, but rather that they should stimulate and lead it. The tea plant was acclimatized in India through Government enterprise, but when once its cultivation was found to be profitable the Government plantations were offered for sale, and the further development of the pursuit was thrown as much as possible upon private energy and skill.

Colonial Governments in fostering public enterprise not outstripping their functions.

If it be admitted that every colony possesses peculiar resources and peculiar adaptabilities for particular branches of enterprise it cannot be denied that a Government that simply seeks to teach to the people the means which Providence has placed at their disposal, does not outstep its functions. We do not advocate the employment by Governments of any large amounts of capital in mere experiments. The security against a tendency of this kind will be found in the discretion that the local Parliament will exercise, and which will again be subjected to the discretion of the Imperial

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authorities. It is not intended that every application for a loan guarantee made by a colony should be granted by the Imperial Government. On the contrary, each application should be narrowly scrutinized, and her Majesty's Commissioners, on whom would devolve the granting or refusing the request, should, before acceding to any demand, satisfy themselves that the purposes for which the money was asked were legitimate, and that the colony borrowing was justified in doing so. If what we have before said be borne in mind, that large as would be the capital supplied by the Imperial Government, there would be a yet larger demand for it from the colonies, it will be seen that the Colonial Loan Commissioners would have the exercise of discretion forced on them.

Profits of the colonies would be difference between rate of interest paid and that yielded by reproductive works.

The profits the colonies would reap may, in fact, be represented by the difference in the interest which they would pay for their money, and the amount of interest which the reproductive works constructed with it, would yield. But the expenditure of the money would also draw population, and every head of population represents so much customs' revenue. If capital be supplied to employ additional labour, that additional labour becomes a contributor to the expenses of Government, and to the gradual repayment of the borrowed money. Colonial populations are highly taxed because of their thinness. The machinery of a government that is available for half a million of people requires few additions to serve a population of

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Indirect advantages arising from reproductive works also to be taken into consideration.

Expenditure of

double that number. A million people would therefore have to contribute little more than half a million; in other words, every addition to the population lightens the taxation to the existing population. Again there is an indirect source of profit not to be lost sight of. A railway may not the first few years pay more than its expenses, and leave the interest on the cost a charge to the colony. But if, owing to the cheapened rate of transit, a large proportion of the population procure their supplies cheaper, and obtain an import market for their produce, a government may feel it is deriving an indirect profit sufficient to justify it in bearing the cost of the interest for a limited period. It may be said the benefit is confined to only a portion of, whilst the cost falls on the entire community. To some extent this may be the case; but as a rule an advantage gained by a large section of a community means an advantage to the whole. If, for example, the settlers in the interior prosper, trade near the coast improves. Again, when governments are large landed proprietors, it must not be forgotten that improvements which benefit the settlers increase the value of property. It really seems almost unnecessary to pursue the argument further. For who will be found to deny, looking at the matter from a broad point of view, and not from one dictated by a doubt as to the value of particular local works--who will be found to deny that the expenditure of seven hundred millions sterling in

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700,000,000l. on public works in 100 years must make colonies great nations

the colonies during the next hundred years would convert them into grand and powerful nations worthy of the source from which they have sprung--worthy of being joined in federate equality with the parent country?

Consolidation and development of her empire Great Britain's mission.

The developing her territory to suit the wants of her population is the great object a nation must propose to herself which thinks she has a destiny to fulfil. A nation which stands still retrogrades, because other nations pass her. It has been well observed of China, "Stationary for ages, she has sensibly declined because she has not advanced." If Great Britain, in the pursuance of her quieta non movere policy, forget that the development of her colonies is a sacred mission entrusted to her, those nations whose one dream of the future is to increase the countries peopled by their people, will pass her in the race. Nor has she long to decide, for with the years there is growing up in the colonies a feeling that will make them disinclined to accept Great Britain's aid. The son driven too early from his father's home, forms other ties, to the exclusion of family associations.

Great Britain should encourage her subjects to employ their capital in the colonies.

There is another branch of the subject to which we must turn. We have dwelt on the manner in which Great Britain can supply capital to Colonial Governments. We may now ask if there is no way in which she can encourage private investments? Unquestionably she will do so to some extent when she aids the progress of the colonies, because she will make her subjects feel

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Trust funds practically prevented from being invested in the colonies.

that greater security is afforded for their investments. But it must not be forgotten that at present she absolutely interposes a barrier to such investments; as far as she can do she forbids them. To a person who for the first time studied the polity of Great Britain, it must be something astounding to learn that the investment of trust funds in the colonies is practically prohibited, and this too whilst these funds are accumulating by millions annually, and no channel can be found for employing them. Public companies in like way are not allowed to invest their reserve funds in colonial lands, although in many cases their principal income is derived from the colonies. Take, for instance, some of the insurance companies whose business is mainly colonial, but whose Acts of Parliament preclude them from colonial investments. We do not know whether the subject has ever been agitated, but we venture to assert the disqualification is precisely one of those absurdities into which an ultra-conservatism occasionally falls. Before the colonies attained to a defined position there may have been sufficient reason for precluding them as fields for the investment of trust funds; but the continuation of the inhibition is simply ridiculous.

Productiveness of investments in colonial lands.

Of course we do not ask that trustees should be compelled to seek colonial investments, but simply that they be allowed to do so. We know of a case in which a person claiming an interest of some five thousand pounds in a trust estate,

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offered undoubted security to the extent of 10,000l. to the trustees, if they would invest the money in colonial property, but they were compelled to refuse. It is notorious, too, that colonial investments increase in value immensely. Hundreds of instances can be cited of persons who have sent out money to their friends to invest for them, and who have found themselves the owners of property which after the lapse of a few years yielded them annually as much money as they originally expended.

Enormous results that would follow the permitting the investment of trust funds in the colonies.

It is difficult to find language adequate to describing the beneficial results that would accrue to the colonies if the disability were removed. Millions on millions would flow in, property would rise in value, and a community of interests would grow up between the colonists and the people of the mother country, which, as we have seen, there is too much reason to fear is wanting now. To those trustees who preferred home investments, the money withdrawn for the purpose of colonial investment would leave the market more open; and this, too, without sensibly impairing the value of home property, for the accumulations of trust funds have become so enormous that practically it will be impossible to exhaust them.

Author has merely suggested outline of a policy.

In closing his remarks the writer disclaims the assumption that he has dealt exhaustively with his subject. He has simply jotted down the bare outlines, leaving to others the task of filling them in. His English feeling unimpaired after a resi-

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Leaves task of filling it in to others.

Opportunity afforded to English statesmen to create a vast and grand empire.

deuce of many years in the colonies, he sees with dismay the growth around him of an anti-English feeling. He sees that in an increasing disparity of interests, Great Britain is forcing alienation on her colonies. He asks that she again should take them to her bosom; that she should look upon them as the seeds of nations to which it has fallen to her lot to give vitality. He pretends not to the power to work out the details of the problem; he asserts only the conviction that those details can be worked out. He has seen enough of the colonies to assure him they only want capital to develope them. This is the very vitality which Great Britain most readily has it in her power to bestow. Unhappily, since the deaths of Labouchere, Molesworth, and others who could be named, few of England's public men have made colonial policy their speciality. Are there none to come forward now--are there none with the ambition to leave behind them the undying fame that through all time will wait on those who have the far-sightedness to conceive, and the courage to create, an empire more vast and imperishable than any which ever inspired the dreams of the wildest heroes of the past--by peaceful means to construct that for which the blood of countless thousands of human creatures has been wasted?

1   We must not be understood to mean that loans on debentures can be obtained as cheaply as those that are funded. There is greater room for fraud, and therefore less security when the debt depends upon the possession of a paper acknowledgment that when it rests upon the admission of direct liability to the creditor.
2   By adding up the different amounts in the table it can readily he ascertained how much interest has accumulated at any given period. Thus at the end of thirty-five years when the eighth instalment would he due, 38,833,900l. would have accumulated, leaving, besides the payment of the eighth instalment, 3,833,900l. available for the ninth instalment, to he added to the 14,796,250l. which would have accumulated between the two dates. For the tenth there would be 18,511,500l. available. For the eleventh, 22,924,300l. For the twelfth, 28,165,550l. For the thirteenth, 84,390,300l. For the fourteenth and following instalments there would be always a surplus on the 35,000,000l. It may be contended that the calculation covers an inconsistency--that the money which was left uninvested would not he fructifying at compound interest. But the 155,253,059l. which, at the end of the 100 years we suppose to remain uninvested, would have accumulated nearly all during the last five years. After ninety-five years, therefore, Great Britain would either have to increase her advances to her colonies or employ the money partly for her own purposes.

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