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South African people, affording permanent free trade to all South Africans within South Africa, and offering a stable basis of investment to industry and commerce.
Egerton says of this Convention: “A customs tariff framed as a treaty between independent states was of necessity a compromise, and, moreover, a compromise very probably distasteful to many who signed it... The sole support of customs arrangements being faith in the diplomacy of individual delegates and not the considered judgment of a representative assembly, there was the ever-present risk of a tariff-war... Had union (political] not been affected, it would almost certainly have proved impossible to maintain the artificial barrier of the customs union... If political union did not come there might have come a breach in the wall of the customs union.”
(1). Now what was the result when the Transvaal got Responsible Government? In June, 1907, the Transvaal Government announced that it had given notice to the other parties of the Customs Union of its intention to withdraw therefrom, "not because the Government was opposed to such a Union, but because the tariff was not placed on an equitable basis." (2). Mr. J. H. Hofmeyr, commenting on this, says: “This dissatisfaction, added to the prominence, which was once again given to the unsatisfactory and undemocratic way of settling the customs policy of the various colonies by Conference, the decisions of which it was impossible to revise, went to show, that the existing system could not long continue.”' (3). Moreover, in the Orange River Colony bounties were granted on jams, sweets and some more articles, and this handicapped the Johannesburg manufacturers, and the Chamber of Commerce was now against a high protective tariff, but considered a system of bounties on local industries favourably. (4).
In order to put matters straight again and provide for the renewal of the Customs Union, if possible, the last inter-colonial Conference was summoned at Pretoria, in May, 1908, to deal with the question of railway rates and the tariff. (5). Here
1. Federations and Unions within the British Empire, pp. 78 and 79.
2. Report of Johannesburg Chamber of Commerce, year ending February, 1908, p. 12.
3. The Life of J. H. Hofmeyr, p. 608.
4. See above-mentioned Report of the Chamber of Commerce, page 14.
5. See also Egerton: Federations and Unions, pp. 82, 83 and 84.
the Transvaal was persuaded to join the Union for one year more. (1). The amendment of the tariff at Pretoria was considered unimportant, because it afforded no relief to the general community and reduced rates on stearine and paraffin wax causing a loss of public revenue!” (2). Amendments and additions to the Convention of 1906 were agreed upon and embodied in a protocol which was subsequently ratified by the respective legislatures. This protocol came in force on August 15, 1908. The general ad valorem rate remained unchanged.
In July this Conference had been continued at Cape Town. At this meeting Mr. Merriman, who was then premier of the Cape Colony, and Mr. Abraham Fischer, premier of the Orange River Colony, supported a proposal to abandon tariff preference. The proposal was defeated by the interposition of General Botha, who thought there was a prospect of a preference being granted by England. (3). This seems strange, because General Botha surely remembered well what happened at the Imperial Conference which met in London in 1907. There it was the Liberals, led by Mr. Asquith, who resolutely opposed the grant of a preference by England on colonial products, because it would have been a violation of the laws of free trade. The result was that General Botha there adopted a very cautious attitude, and did not support the agitation for imperial preference. He thought himself under an obligation to the Liberal Government of Asquith, because that Government had granted Responsible Government to his country. He observed there “that the people of the Transvaal had not been consulted about preferential trade since receiving Responsible Government... It was now a matter for Great Britain to settle, and his own impression was that the recent general election had decided it. Though no reciprocal preferences were given, 'the bond between the Transvaal and the mother country will not thereby be weakened'.” (4). This seems to point to the fact that General Botha did not interpose because he expected reciprocity from the United Kingdom, but because he was afraid that the bonds between South Africa and England would be weakened by an abolition of preference on British goods.
In the meantime this Customs Conference, which had plainly shown how divergent the interests of the colonies were,
1. See Worsfold: The Union of South Africa, p. 122, and O. Y. B. (3).
2. Johannesburg Chamber of Commerce, Report for 1909, p. 23.
had pointed the way to the National Convention, which in turn led to the Union of South Africa. Shortly before Union, the four colonial Governments gave notice to Rhodesia, Basutoland, and Bechuanaland Protectorate of their intention to retire from the Convention on June 30, 1910. (1). The Union Government thereafter entered upon various customs agreements with Rhodesia and the High-Commissioner of the Territories whereby it was agreed that the Customs Union tariff as amended by protocol on June 23, 1908, should, until altered by legislation enacted by the Union Government or the Administrations of the various South African Native Territories, continue in force in British South Africa. (2). This was according to Clause 136 of the South African Constitution Bill of 1909, which provided that: “There shall be free trade throughout the Union, but until Parliament otherwise provides, the duties of customs and of excise leviable under the laws existing in any of the colonies at the establishment of Union, shall remain in force. Thus all domestic goods with the exception of spirits and beers could pass duty-free between the Union and Rhodesia and the Territories. Customs duties levied upon external goods in transit were to be rebated. If goods were imported into the Union in transit to Rhodesia, the Union Government had to collect the duties leviable under the common tariff and pay them over to Rhodesia, minus 5 per cent. for cost of collection, and Rhodesia had to do likewise in the converse case.
In case of goods imported and destined for the Native Territories, the following regulation was made in the South Africa Act: All the duties of customs levied on dutiable articles imported into and consumed in the Territories was to be paid into the Treasury of the Union, and for the cost of administration of each Territory there was to be paid annually out of the Treasury, a sum in respect of such duties, which was to bear to the total customs revenues of the Union for each financial year, the same proportion as the average amount of the customs revenue of such Territory, for the three completed financial years last preceding the Act, bore to the average amount of the whole customs revenue which was received during the same period for all the colonies and Territories included in the Union.
1. See Worsfold:
The Union of South Africa, p. 379.
2. Cd. 6476, p. 23. Since 1910 the Union has maintained commercial relations with Southern and Northern Rhodesia by customs agreements.
Portuguese East Africa, according to the arrangement made by Milner in the modus vivendi of December 12, 1901, and modified on June 15, 1904, by which goods, the real products and manufactures — except spirits — of that province, were allowed duty-free into the Transvaal and vice versa, continued to enjoy this privilege by the agreement between the Transvaal and Mozambique, signed at Pretoria on April 1, 1909. (1). Such products, however, when they were removed into any of the other provinces of the Union or to Rhodesia or the Native Territories, became subject to duties leviable upon similar external imports under the customs tariff.
In 1910 a Union Government Commission was appointed to report on the industries and trade of South Africa. (2). The majority report of this Commission recommended increases in a number of duties — for example, it recommended low duties on household and personal necessities and high duties on luxuries. But in the opinion of the Annual Congress of the Association of Chambers of Commerce, a protective tariff was 'opposed to the interests of South Africa because:
i. It increased the cost of living and thus discouraged immigration. This can hardly be taken seriously in view of the experience of a protectionistic country like the United States.
ii. It created monopolies. This is all very well, but the Association went on to plead for a bounty system, which would have very much the same effect. But the Chambers had to please both the mining population and the manufacturers. (3).
In the draft Customs Management Bill published in 1912 (4), a “dumping” clause was inserted. The Committee to the Johannesburg Chamber of Commerce opposed this on the following grounds :
i. No proof was forthcoming that what was known as “dumping” took place in South Africa to the extent that was calculated to injure South African industry.
ii. Imports from America into England (America is usually considered as the chief sinner in this respect) consisted of:
1. State Papers, Volume 102, p. 118. See Appendix iii.
2. See O.Y.B., No. 3, p. 138. The Customs Tariff Act of 1914 resulted from the work of this Commission.
3. Johannesburg Chamber of Commerce Year Book for 1913, pp. 8 and 10. 4. Ibid., p. 74.
a. Foodstuffs, 41.72 per cent.
Assuming that articles coming to South Africa under "dumping" conditions were generally similar to the above, they calculated, that the extra cost resulting from increased duties would fall upon the foodstuffs of the people mainly, and upon raw materials required by South African industries In either of these cases, they thought, the operation of the clause would be to the serious detriment of the country. But besides the fact that there was hardly the possibility of dumping foodstuffs and raw materials into South Africa, it should also be remembered that the fact whether dumping benefits the consumer depends upon its continuity and permanence. If it is merely sporadic - calculated to get the exporter a foothold in a new market — its ultimate results are likely to be injurious.
However, the result of this protest to General Smuts, who was then Minister of Finance, was that the "dumping" clause in the Customs Management Bill was omitted in the Session of 1912. (1).
It has been pointed out above how diverse the interests of the Colonies seemed to be after the coming into operation of the Customs Union of 1903. In 1906, however, the Customs Union was renewed and preference considerably extended. On July 1st., 1904, the Customs Union had entered into a reciprocal agreement with Canada; on October 1st., 1906, and on January 1st., 1907, it entered into reciprocal agreements with Australia and New Zealand respectively. In 1908 the Transvaal gave notice of its intention to withdraw from the Customs Union. The interests of the Transvaal with its big mining population, were opposed to those of the maritime colonies, whose interests were along the manufacturing line. This breach was patched up, and since the political union of the four colonies in 1910, the Customs Union has been periodically renewed by act of Parliament and by agreement.
Union both commercial and political had at last been attained — the dream of South Africa's greatest statesmen. Four years had elapsed after the political union and then South Africa entered upon an unprecedented industrial development. This was not brought about by any definite system of national
1. Johannesburg Chamber of Commerce Year Book for 1913,