The Future of British Imperial Preferences

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THE British imperial preference system was born out of the union of political exaltation and economic uneasiness. The British Crown emerged from the imperial campaigns, of which the Boer War was the last, with immense new territories. British settlements throughout the world were swept by a feeling of triumphant national pride. Readers of Kipling will be familiar with the emotions of the time, which have been more lately recalled for us in the historical moving picture "Cavalcade." But these give no sign of the uneasiness that at the same time was invading those dim offices of London and Birmingham where the watch is kept over Britain's trade condition. The United Kingdom was carrying almost all the rapidly mounting cost of imperial defense. Its share of world trade had clearly declined during the past 20 years; German and American competition were growing more difficult to meet. The idea of trade preferences within the Empire, discarded many decades before, gained support both as a means of uniting the scattered domains and of sustaining Britain's trade.

The first significant step was taken around the turn of the century, when Canada and South Africa enacted preferences for British goods. When Joseph Chamberlain sought office in 1906, however, on a program of tariffs for Britain and preferences within the Empire ("a true Zollverein for the Empire") he was badly defeated. Britons still wanted cheap food; British industry still wanted cheap raw materials and had confidence in its ability to hold its own. The First World War brought the change: between 1915 and 1922, 26 governments within the British Empire and Commonwealth granted preference of some kind to goods of British origin; and the United Kingdom began to reciprocate, first chiefly by granting favors on sugar, wine and tobacco, and then by extending the preferences to a growing list of agricultural and industrial products.

The Smoot-Hawley bill drew together all the members of the British Commonwealth in injured indignation; and the injury to their exports was the harder to bear because other foreign markets were also being reduced by trade controls. Britain, already leaning strongly toward increased protection, made a major tariff revision. Its extent is indicated by the fact that 83 percent of Britain's foreign imports had entered free of duty in 1930 while in 1932 only 30 percent did so...