increase in the imports of raw cotton and a steady decline in the imports of British cottons.

The competitor of the British manufacturer in Canada is, not the United States and not Germany, but Canada herself. Not only has the natural increase of demand in the decade been supplied by the Canadian mills, but British imports have declined. The same is true of woollens, the imports of which from the United Kingdom declined from $11,026,329 in 1890 to $5,553,094 in 1897. In both cottons and woollens there has been an increase since the preference came into force; but whether this is due to the general expansion of trade or to the preference is not quite clear. In any case, however, the decline has for the time being been arrested.

From this consideration it is clear that on these articles, as on many others, the most important effect of the preference has been a reduction of the protection afforded by the tariff to the Canadian manufacturer. In the face of the vastly greater Canadian competition within the Canadian market, the competition of Germany and the United States with the United Kingdom may practically be neglected; and preference ceases to be a 33 per cent. preference over foreign rivals, and becomes a 33 per cent. reduction of the duty-in other words, a measure of free trade, and not an Imperial preference.

It is not safe to draw conclusions regarding the unannounced intention of legislators; but one fact seems to suggest that those who framed the preferential clauses knew who was the real competitor of the United Kingdom. The rate of duty on most of the important articles imported from Great Britain was increased before the preference came into operation; and the net result of the 33 per cent. reduction is not by any means so great as it appears. Other tariff changes have been made, but in the main they do not affect British trade. Goods transferred to the free list are not affected by any preference, and of the articles on which the general duty was reduced in 1897 or later, we buy comparatively little from the United Kingdom. Generally speaking the rate on textiles was increased, the rate on manufactures of iron and steel reduced. The following table shows the old and present rates on some of the most important articles whose

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