duty has been altered since 1897, together with the net results on imports from the United Kingdom.

The trade of the United Kingdom affected by these changes in the tariff is considerable. The duties were raised on $10,210,000 and lowered on $646,000 only. The reductions, moreover, could not affect British imports materially, for, in the majority of these articles, whatever may have been the case with other countries, the British exporter sent goods to the value of a few hundred dollars only.1 That is, on fully a third of the British dutiable imports, and nearly one half of the amount imported under the preferential clauses, the net reduction has been less by several points than it seems. The duties were raised on those articles imported from the United Kingdom which come most markedly into competition with the products of important Canadian industries. The first effect of the preference was actually, for the fiscal year 1898, to increase the duty paid on these imports. But the 12 per cent. preference was temporary, and was in force for a single year only. The net result may be said to be a reduction of duty from 1900 onwards, of 63 per cent. of the value of the textiles imported and of 10 per cent. on those goods which do not enter into fierce com

1 These reductions were made in or before 1898. There has been considerable reduction since, affecting $1,565,000 worth of imports from the United Kingdom.

petition with Canadian products. This is a not insignificant step towards free trade and a revenue tariff; but it can hardly be regarded as a satisfactory result of an Imperial preference.

The remaining anomaly, that the imports of goods from the United Kingdom which receive no preference have increased faster than those which do, admits of an easy explanation. The most important item in this class is spirits and malt liquors; and it is true of Canada, as of other countries, that prosperity means increased consumption of alcoholic beverages.

The conclusions may be summarised as follows:

1. That the preference has not, for reasons given, had the anticipated effect; but it seems to have checked a decline of British trade. 2. That it is a measure of free trade rather than of Imperial preference.

3. That, by reduction of duty, and, consequently, and to that extent, of price, it has benefited the Canadian consumer rather than the British exporter.

4. That, in so far as it gives a preference over foreign competitors, the effects are not likely to be fully realised except during a depression of trade.

In the following tables, the more important articles imported under IMPORTS (FOR CONSUMPTION) OF PRINCIPAL ARTICLES UNDER PREFERENTIAL CLAUSES INTO CANADA FROM U. K., U. S., GERMANY, ETC. (000's OMITTED.)

the preference are set down to admit of a comparison between the imports from the United Kingdom and the United States and other competitors. The annual average for the three years 1894-96 is taken as a standard. It will be noted that in twelve instances British trade has actually declined in spite of the preference in nine cases it has increased, but not so fast as the trade of her rivals in that article who have no preference in seven instances her trade has increased faster than that of her rivals. J. DAVIDSON

MUNICIPAL TELEPHONES.

ON the 6th of March of last year Mr. Hanbury introduced his "Bill to make further provision for the improvement of telephonic communication." It contained two clauses, the first empowering the Treasury to advance to the Postmaster General the sum of two millions sterling for the purposes of telephony, the second authorising the councils of county boroughs, when licensed by the Postmaster General, to defray the expenses arising out of the establishment of a telephonic exchange out of the borough fund or borough rates. In the speech which was delivered upon that occasion, Mr. Hanbury explained that the two millions were to be spent in establishing competition in the London telephone area. The Government do not appear to have taken up the question of telephone supply in the London area with any degree of vigour, and no declaration of policy respecting the duration of the license of the National Company in that area has yet appeared. The first clause of the Bill was adopted with but a slight variation. The clause affecting the councils of county boroughs was widened by the addition of "urban district councils" as local authorities empowered to establish a telephone system in the telephone area of which they form a part. The latter change is not without value. But, unfortunately, the alterations in Mr. Hanbury's Bill were not confined to these. By an arrangement with the National Company a third clause, consisting of six sections, most of them of considerable length, and all of them transcendently important, was introduced into the measure. The effect of this third clause was revolutionary. The Bill which was designed to encourage competition was transformed into one by which competition was hedged about with such restrictions as to make it extremely difficult if not dangerous. As illustrating the enormous political power possessed in the House of Commons by the National Telephone Company, it will suffice to say that the only return made by the Company for this huge concession was the resignation of its "all country" license and the acceptance of one which confined its operations to those telephone areas in which, at the passing of the Act, an effective exchange had been established. The trifling value of this supposed quid pro quo is apparent on the face of it. The Company at that time had

established exchanges in every paying district of the country. They could naturally afford to relinquish their authority to lay down the telephone system in the non-paying rural and semi-rural districts. From a consideration of this third clause of the Act and of the Treasury minute of the 8th of May, it appears that the National Company undertook the task of preventing competition with themselves. Failing the achievement of this object they next endeavoured to secure (1) the purchase of their plant in competing areas at the termination of their present license, i.e., in 1911, (2) the transformation of the underground way-leave privileges granted by municipalities under conditions, and terminable at from six to twelve months' notice, into statutory rights, and (3) an extension of the period of their license to the limits of that covered by any competing system. I shall have no difficulty in showing that they secured every one of these three objects.

Clause 12 of the Treasury minute of the 8th of May, 1899, reads as follows:-"My Lords propose that where within a reasonable period. bona fide competition between the National Telephone Company and any local authority is established in any area where the Company are now working, similar treatment should be applied to so much of the plant of the Company in such area as existed at the time when the competition was inaugurated. Further, if the Company within a reasonable period give intercommunication in such area between their exchanges and the exchanges of the local authority, on conditions approved by the Postmaster General, the purchase will extend (on the same terms) to the plant of the Company constructed (with the sanction of the Postmaster General) after the commencement of the competition." The "similar treatment" referred to in this paragraph is explained by the one which precedes, in which it is explicitly stated that "it will be a condition of the license to a local authority that on the termination by the Postmaster General of such license, the local authority shall sell and the Postmaster General shall purchase all plant then in use in the telephone service of the local authority which is suitable for the actual requirements at the time of the local service of the Post Office." It is important to observe however that whereas the purchase of municipal plant is to be confined to twin wire circuits, the twelfth clause, which deals with the plant to be purchased from the National Company, contains no such specification. It is therefore open to assume that the National Company are assured in the purchase of their telephonic plant in all those exchanges in which effective competition is established, whether such plant is constructed on the antiquated single wire system or on the more effective and modern one of twin wires. An explicit declaration by the Treasury on this point would be extremely useful as well as instructive. The terms under which intercommunication between rival telephonic systems in the same exchange area is to be arranged are set forth in the Statutory Rules and Orders, 1899, No. 751. Put briefly these are as follows:-When the subscribers of the new licenses number 500, but