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by entering into the Customs Union of 1898. Moreover, the Transvaal tariff was in certain respects strictly protectionistic. There was, for example, a jam factory at Pretoria, and the duty on jam was 40s. per 100 pounds (1) while the Customs Union tariff fixed the same duty at 18s. 9d. Many other instances like this may be cited, and they might easily have been overcome by the Transvaal, but she was contented. The Transvaal had its backdoor at Delagoa Bay, and decided to
per cent. transit duty rather than enter the Customs Union. (2).
The tariff of duties which came in force under this Customs Union of 1898 was considerably lower than the previous one, although it might be said that it was framed on protectionistic principles. The margin between the duties on wheat and flour was reduced. The general ad valorem duty which was 12 per cent. under the tariff of the first Customs Union was reduced to 74 per cent. The unpopular duty on turmeric was reduced to 1d. per pound. The wine industry was looked after. Duties on luxuries and drinkables were increased. Free trade in all South African produce and manufactures was established. The farming interests were looked after, for example, agricultural implements and machinery and all apparatus and plant employed in farming operations were duty-free, so were living animals not intended for slaughter, bags, harvest yarn, manures, and so forth. In general it might be said that this tariff gave more encouragement to the farming industry than the tariff of the first Union. It was also favourable to the coal-mining industry of Natal. (3). Mining apparatus was allowed duty-free and so was bagging, while the duty on coal was increased from 2s. to 3s. per ton. Similarly the Natal sugar industry was encouraged. Unrefined sugar, the produce of the cane, was allowed under a duty of 3s. 6d. per 100 pounds, while sugar, not the produce of the cane was
1. See Report of the Johannesburg Chamber of Commerce for the Year ending February 28, 1903, pp. 14, 15 and 31. See also the tenth report for the period 1 March, 1899 — 28 February, 1902, pp. 22 — 23.
2. See State Papers Volume 67, pp. 1,256 — 1,265, Article viii. Transit duties are usually bad: they tend to reduce the profit of the country performing the service of transportation, reduce the commercial activity, and so forth. Trade was deflected from Cape ports to Delagoa Bay.
3. As early as 1889 the coal-output of Natal was 25,609 tons, while in 1909 it was 1,786,568 tons. The imports of coal into Natal virtually ceased in 1900 although it was temporarily resumed during the War. See Natal: Descriptive Guide and Official Handbook.
allowed under a duty of 5s. per 100 pounds, and so was all refined sugar. This duty on sugar not the produce of the cane was perhaps against European competition. The wool-washing industry also got some encouragement. With regard to the latter industry it was evpressly stipulated that a rebate of customs duty was to be allowed to wool-washers on soap imported for and used exclusively in connection with this industry. (1). This tariff was so framed as not to impair the relations entered into by the Orange Free State and the Transvaal in the Treaty of Potchefstroom, signed by the two states on March 9, 1889. (2).
The tariff was not popular in Natal (3), but the party which was following a "free trade policy" in Natal, was not strong enough to prevent ratification, and so the Customs Union was ratified by 22 votes against 12.
We have now traced the first movements in the direction of tariff uniformity in South Africa. Natal was now in the Union because: (a) The Union tariff had been lowered since 1889; and, (b), Natal had now a party in power which was not antagonistic to high customs duties. The Transvaal again held aloof because: (a) The Republic was disgusted after the
'drift” question, and perhaps suspicious after the Jameson Raid; (b) The Republic now had its back-door at Delagoa Bay, and was independent of Cape and Natal ports. It preferred to pay a transit duty of 3 per cent. which was now levied on its goods at Cape ports, to entering the Customs Union. In between this and our next step, which will be a description of the object ultimately attained and how attained, there intervened the tragic drama of the Boer War (1899 – 1902). Only after much bloodshed and tears the dream of commercial uniformity for South Africa, South of the Zambesi, became a reality.
1. State Papers, Volume 81, p. 762.
THE GOAL ATTAINED.
Immediately after the Convention had been signed in 1898, events started to move rapidly and disastrously in South Africa. The Boer War was fought, and it “led to a rally of imperialist sentiment in the self-governing dominions and their active support of the war gave a new, passionate emphasis to the notion of a self-sufficing Empire bound together by a system of mutually preferential tariffs." (1).
(1). At the end of May, 1902, the Peace of Vereeniging was signed, and at the Customs Conference which was convened at Bloemfontein, on March 10, 1903 — about nine months after the noise of cannon stopped – a motion was proposed and carried : a motion which approved that provision was to be made in any customs union tariff for preferential duties on the products and manufactures of the United Kingdom and also of any British Colony or possession which may offer reciprocal privileges.”_(2).
This movement for imperial preference was no new thing in 1903 — the movement for an “Imperial Zollverein.' At the Colonial Conference which met in London between April 4 and May 9, 1887, Sir Samuel Griffith, the prime minister of New Zealand, had pleaded for closer union of the British Empire, which he thought could be achieved by giving preferences to the different parts of the Empire as against foreign countries, in the form of differential duties. (3). At the same Conference Mr. J. H. Hofmeyr put forward another proposal. He held that an additional duty of 2 per cent., independent of the existing colonial tariffs, should be levied on all imports from foreign countries, and that the proceeds should be devoted to the general defence of the Empire.
Thus there was to be an additional duty throughout the Empire on all foreign goods or a reduction of duties upon British and colonial goods in colonial ports accompanied by differential treatment of foreign as contrasted with colonial
1. J. A. Hobson: The New Protectionism, pp. 19 — 20.
3. See Cd. 5,091; also C. J. Fuchs: The Trade Policy of Great Britain, pp. 340 — 345.
goods in "home" ports. (1). Hofmeyr especially pressed his point. He declared that by his scheme he meant to counteract "territorialism,” or the tendency of the local interests to bring about an ultimate disintegration of the British Empire. His scheme had two objects in view :
(a) Revenue for defence;
The idea of preference was thus so to speak initiated by Hofmeyr in 1887. Mr. Hofmeyr says of this idea of Mr. J. H. Hofmeyr, in his Life of J. H. Hofmeyr (3):- ...“Mr. Hofmeyr's proposal is far less liable to objection than the ordinary scheme for preferential tariffs. As he pointed out it did not necessarily imply protection, and it might in the end lead to a system of Imperial Free Trade; the imposition of a duty of only 2 per cent. would not involve an appreciable increase in the price of food; the cry of additional taxation for the already over-burdened British tax-payer would be considerably decreased, and in any case, not even from the point of view of the manufacturer, who feared the taxation of raw materials, was such a low duty a very disturbing element." Rhodes took up the preferential tariff scheme, and when the Chartered Company of Rhodesia was established, Rhodes had "with great difficulty” managed to get a clause inserted in the constitution to limit the Rhodesian tariff on British goods to 9 per cent. But the man who really brought about preference with Great Britain in South Africa, was Lord Milner. (4).
Chamberlain believed that the Empire should be bound together by commercial ties. This, he thought, could be done by a system of Imperial preference, whereby the United Kingdom would impose customs duties a duty of 10 per cent. on manufactured articles, a low duty on food articles, and no duties on raw materials - on all imports except those coming form the colonies. The colonies were then to reciprocate by giving preference to British manufactures. Three things would thereby be achieved:
(a) The preferential agreement would work towards imperial unity.
(b) As such a scheme would mean protection to a greater or lesser extent, it would be a stimulus to British manufcturing interests. There would be higher prices under such a scheme,
1. Dilke: Problems of Greater Britain, pp. 630 — 632.
4. Jebb: Colonial Conference, Volume i, p. 183 and Volume ii, p. 212.
but the preferences granted by the colonies to British Manufactures would enable British manufacturers to compete even under these circumstances with their foreign competitors. (It should be remembered that Chamberlain himself was a very successful manufacturer).
(c) There would be revenue duties for imperial defence. This arrangement would, it was hoped, prevent British trade from falling into the hands of Germans and Americans, and manufacturing England would have raw materials in plenty.
Canada was the first to take the step of granting preferences to British manufactures. As was stated above, Canada was the first of the British Dominions to make use of her fiscal freedom to establish a protective tariff, not only against foreign, but also against British manufactures. England protested, but Canada's "National policy" prevailed. When Laurier's Liberal Government came in power in 1896, he took over the protectionistic program of the conservatives. He, however, revised the tariff, and enacted the preferential tariff for Britatin, by which a reducion of one-eighth of the general rates on nearly all articles subject to duty was made on imports from the United Kingdom. (1). In 1898 the preference was increased to one-fourth, and in 1900 to one-third. But this preference meant so much less protection for her own manufacturers against British competitors, and the result was, that, when it became clear that the woollen industry was suffering under these regulations, the tariff was readjusted in its interest in 1904, (2), and manufacturers took good care to get the preference whittled down still further between 1904 and 1906. (3).
This policy of granting preference on English goods originated amongst Canada's most protectionistic elements. It was first suggested at the Manufacturer's Convention at Toronto, in 1876, and was later elaborated upon by Sir Charles Tupper, the staunch supporter of Macdonald, the stout champion of protection. There was also some element of retaliation to the United States on the part of Canada in this grant of preference to England. However, Canada's motives were mixed. She was concerned with England's welfare as well. It was not only a case of protection and retaliation. Some of the loyalty was real.
In 1903 Milner had his chance to make South Africa adopt preference, while New Zealand and Australia followed at
1. See Higginson: Tariffs at Work, p. 17.