THE ROYAL BANK OF CANADAHEAD OFFICE, MONTREAL

June, 1944

(This is Part2 oJ a discussion of the British Empire.Last month’s Letter dealt with the Dominions, theposition of the Crown, and the general philosophy ofthe Empire.)

THE British Crown encircles not only the aucientglories of a particular people, but the hope andpromise of a broadening life for hundreds of

millions of others.

An American, Henry J. Taylor, has just publisheda book, "Man in Motion", in which he refers to theBritish Empire in this way: "Considering its scope,the British Commonwealth of Nations is the mostremarkable political achievement in history. It hasovercome more tyranny, supplied more safety,removed more fear, taught more justice, and givenmore freedom to more people than any other institu-tion on earth. It is not only worth preserving, in theinterests of free men, but unless Britain preservesher so-called Empire there will be no freedom formillions upon millions who are now as free as theycan safely be . . . Talking about colonial freedom isone thing. Supplying it is quite another. Furthermore,80 per cent of the colonials of the world could not, orwould not, use their freedom to maintain freedom.Eighty per cent of the world’s people simply are notready for what we are talking about."

Colonial administration is a tremendous task.

The Colonies Ignoring the Japanese occupation ofmany of them, there are 40 units in the

British colonies, averaging 47,000 square miles. Togovern them has required the setting up of a ColonialOffice, with the Secretary of State for the Colonies amember of the Cabinet. In each colony and pro-tectorate there is a governor who is the direct repre-sentative of the King. On the civil service staff of theColonial Office are men with special knowledge of eachcolony.

Most British colonies were established by privateenterprise, and not by government action. They wereall equipped with representative bodies having controlover legislation and taxation, though the executivepower was held in most cases by nominees of theCrown. Virginia, the earliest English colony on thiscontinent, was only 14 years old before it establisheda representative assembly, the first representative

body which ever existed outside Europe. Thisprecedent was followed in every subsequent colonywith encouragement of the home authorities.

The liberality ol~ the British system is best under-stood in contrast with, say, the French, who employdirect rule, insist on French as the sole language ofeducation, and try to assimilate the native populationto the French way of life. The British, on the otherhand, encourage indirect rule, use vernacular lang-uages in the early stages of education, and encouragecontinuance of the native arts, culture and specialqualities. The colonies of Britain are all travelling atdifferent speeds, according to their capabilities, alongthe road toward complete and final self-government.Britain mainly derives benefit from her coloniesthrough the provision of opportunities for young menin the colonial administrative service, and through theopportunities offered to traders and developers, suchas engineers. Taxes raised in a colony are spent in thatterritory, and the United Kingdom supplementslocal revenue with contributions from its own ex-chequer, raised by taxes on the people of Britain.The complete fallacy of the loosely-made chargesthat Britain owns and exploits the colonies is de-monstrated by the answer that Britain draws notribute whatever from them; she enjoys no tradingmonopoly in them: she enlists from them no fightingforces, beyond what are necessary for defence andpolice purposes.

Two questions are asked as a part of British develop-ment of a territory: (1) how call this area be developedso as to make its resources available to the rest of theworld ? (2) how can we raise the standard of livingof the local people, and so enable them to play theirpart as markets for the produce of other areas ? It istrue that Great Britain gives preferences to, andreceives preferences from, her colonies, but theabsurdity of a theory that there should be any mono-poly of colonial products is easily demonstrated.People in the colonies are principally engaged in theproduction of primary commodities, partly agricul-tural and partly mineral. Productive capacity ofthese raw materials is growing throughout the world,with a tendency for the supply to exceed the demand.It is essential, therefore, for countries with colonialraw materials to widen their markets, selling to all-comers, and not to conserve them jealously for theirown use. Consequently, countries in the Empire areencouraged to seek markets.

Interna-tionalization

A statement of policy made in the House of Com-mons last summer rejected the suggestionof internationalization of administrationof the colonies, while at the same time

welcoming the establishment in certain areas ofpermanent international commissions made up of allstates with major strategic or economic interests inthose areas. These commissions, with representativesof the territories themselves, would consult on mattersaffecting security, transport, economics and socialwelfare. There are several reasons why internationaladministration would not be satisfactory. Thedifficulties of administration in backward countriesare great enough even with staffs made up of personsof one nation. Lack of experience in handling nativeproblems might cause not only a slowing-up of develop-ment but even a dangerous recession. Moreover,many of the colonies are highly developed politically,and are definitely hostile to any form of international-ization. Great Britain governs her colonial territoriesas a solemn trust, and is in honour bound not totrifle with the loyalty of the colonial peoples as if itwere something that can be traded in.

From a world-wide viewpoint there are two con-siderations about colonization. Colonial peoples mustbe safeguarded against misgovernment and exploita-tion, and helped to move forward until they are fitto take their place in advanced civilization. Thesecond point is that all civilized peoples must havefair and equal access to the resources of these regions,with opportunity to share in their development.

To further the advancement of backward people,there is needed an intensified effort to improve health,education and cultural development, and this must bedone in such a way as to graft western world techniquesand ideas on the native base without disruptingnative life. The interrelation of economic and socialfactors cannot be overstated, and the Colonial Officeis steadily progressing in bringing them together intoharmonious co-operation. Much stress as being laidupon health, as the basis of all social advancement,but progress is held back by native ignorance, pre-judice and superstition, and by climatic environment.A Blue Book on colonial matters issued in 1939 con-tains an inspiring hundred pages about progress insocial services and development.

EmpireGovernments

It is impossible to obtain an idea of individualEmpire governments by studyingthem in alphabetical or geographicalorder. Read that way, they seem to

spell utter confusion. They run all the way from theSouth Atlantic Island of Ascension, which wasgoverned by the Navy as a ship until 1922, to Eire,with its constitution of 1937, which calls itself a"sovereign independent state". But all these formsof government, arranged in ascending order of relativelocal self-government, present a symmetrical series:at the top are the self-governing dominions; at thebottom are such outposts as the Friendly, or TongaIslands, about 380 square miles in extent, which forma sovereign state under British protection. Theyhave a queen, who is advised by a parliament. The27,000 natives are not British subjects, but Tongadeclared war on Germany in 1939. It is an example

in miniature of the self-government sought for eachsection of the Empire, as a step toward the mostcomplete autonomy.

Those charged with direction of the Empire believetheir supreme duty to be the preparation for freedomof races which cannot as yet govern themselves, andthinking people believe this to be the spiritual endfor which the Commonwealth exists. An AmericanAmbassador called the British Empire "a school ofgovernment that inevitably leads to self-government."The policy is first to train the backward peoples inthe management of local affairs by. delegating author-ity to village and tribal organizations, and graduallyto widen this scope. The British are exceedinglypractical. The question in mind when a propositioncomes up is, "Will it work?". They have not becomecarried away by theories of government which, how-ever applicable to certain peoples at certain steps ofdevelopment, may be wholly inapplicable to othersat other stages. The form of government must beadapted to the conditions, needs and degrees ofpolitical development of each territory. As a result,the British Commonwealth remains faithful to ideasof government founded in responsibility, while manyparliamentary institutions planted in unprepared soilare fast disappearing.

A striking problem arising out of the curious natureof the association of countries in the Empire is that ofimmigration and national status. There is a Britishsubjecthood shared by all citizens of the Empire,distinguished from the purely national citizenshipgranted to them by the particular member-countriesto which they belong. The Dominions are tending tomake local status the basis of rights and duties, and toregard the common status as implying merely theconsequences of common allegiance to the sovereign,consequences which may be maximized or minimizedin law at the discretion of dominion legislatures.British subjects going from one part of the Common-wealth to another find themselves with rights less thanthose of local citizens but greater than those of aliens.This is not important in law, but it has great import-ance in sentiment, and some Empire countries wouldhave difficulty in persuading their people to give upthe title "British subject" even though offeredidentical rights and duties under another name. Theproblems arising out of immigration are not so likelyto be as pressing in the immediate future as theywere at times in the past. There has been no greatmigration from one part of the overseas empire toanother, and migration from the United Kingdomhas fallen to a mere trickle. Britain has become, onbalance, an immigrant country since 1930, and, aspointed out in our Letter in January, it is no longer asource of population for overseas countries.

EmpireResources

The British Empire is occasionally referred to byorators as having an abundance of everyraw material, but in fact the UnitedKingdom and her dependencies (omitting

the self-governing dominions and India) have a netdeficiency of every important foodstuff except freshmilk, tropical fruits, vegetable oils, cocoa, tea andcoffee. If the dominions’ and India’s supplies beadded, there is an exportable surplus of wheat, andself-sufficiency in rye, rice and potatoes. Even so,

it is partly dependent on foreign sources for maize,beef, pork, bacon, mutton, butter, cheese and sugar.The United Kingdom and the dependent empire haveexportable surpluses of tin, manganese, coal, rubberand graphite, and are about self-sufficient in bauxite,vanadium, phosphates, sisal and vegetable oils. Ifthe dominions and India are brought in, the followingare added to the list of raw materials of which thereis an exportable surplus: lead, nickel, chromium,vanadium, asbestos, platinum, wool, jute and vege-table oils, and there is self-sufficiency in iron, copper,zinc, tungsten, magnesite, phosphates, and timber.The whole Empire remains partly dependent on out-side sources for sulphur and cotton, and largelydependent on outside sources for molybdenum,antimony, petroleum, potash, mercury, silk, flax,hemp and manilla. It is readily apparent that theEmpire could have no serious policy of building self-sufficiency.

World Trade

Instead, the Empire seeks world-wide trade.Britain it was who proved that twomerchants of different countries trading

together will both become rich, and each makes thebalance in his own favour, so they do not get rich outof each other. Britain also found that business instaples is safer than in so-called fancies, such as thoseproduced by Japan, because demand for the lattermay vanish at any time. She found, too, the potencyof a brand new want. There was no demand fortobacco in the England of Raleigh’s time, becausetobacco was unknown: then it was introduced andalmost immediately became a want: today it isnearer a necessity. One generation acquires 50 wants,and invents 50 ways of satisfying them, but each inturn engenders two new wants. Britain’s inventivegenius and her large-scale industries with theirspecialized products have put a new premium onwide markets. By 1870 Britain’s trade was $530million more than the trade of France and Americacombined, but such a commanding position couldnot be maintained in the face of the rapid industrializa-tion of every other modern state. In 1890 her leadwas only $40 million, and at the outbreak of war in1914 the combined trade of France, the United States,Germany and Japan was more than double that ofBritain. Outside Britain, the trade of the Empiregrew from $230 million in 1810 to $10,805 million in1926. In 1810 all save a negligible amount was withBritain; by 1926 only $3,326 million was with Britain,roughly one-third, and in 1938, $2,900 million.

Before this war, the British Empire was transactingabout 28 per cent of the total trade of the world, adecrease from the 36 per cent of 1914. Those whopicture the Empire as a closed trading monopolywill find this table illuminating:

UNITED PROPORTION OFKINGDOM TRADE WITH :

British United OtherEmpire States Countries

Per centImports from: 1913 24.9 18.4 56.7

I938 40.4 12.8 46.8Domestic

Exports to: 1913 32.9 9.4 57.71938 49.9 4.3 45.8

In the last full year before the war, Canada imported$425 million worth of goods from the United Statesand $186 million worth from the British Empire,while she exported $346 million worth of goods to theUnited States and $443 million worth to the Empire.

The OttawaAgreements

Britain doubtless gained on throwin~ open hermarkets to the whole world in 1846,when she invited other European nationsto co-operate in the development of

vast lands, to send settlers to live in freedom under theBritish flag, and to increase the trade of these landswith the rest of the world. There were many inter-mediate steps between that situation and the OttawaConference in 1932, but all were logical. There was aconflict between the political and economic motivesfor economic co-operation. Fears were driving, andwants leading. The world depression pushed theEmpire countries toward a defensive policy. Theobjective was, in part, to re-establish reasonableprices for the primary products on which the Domin-ions were so largely dependent, but there were externalpolitical as well as economic repercussions. Thereis no evidence of the establishment of an economicbloc, though much of the outside world believed thatsuch a bloc was in the making, and the ill-will andretaliation thus engendered added to the difficulty ofan already tense international situation. Because theOttawa Agreements have been cited recently as oneof the causes leading to war, it is well to examine theirtrue significance. In the first place, why should therenot be special economic arrangements among thecountries of the Commonwealth ? It is a politicalorganization, loose as we have seen, but neverthelessreal. It is valuable as a means of preserving peaceand order among its members and as a contributiontoward peace and order in the world. If that organiza-tion could be strengthened by economic or other ties,that would be of value to the whole world. This wasespecially true in an era when other countries weretrying by all means in their power to render themselvesself-sufficient, largely from political motives. Theyabandoned economics in favor of preparing themselvesfor aggression. There was, as evidenced by breakdownof the World Economic Conference, no chance ofsuccess in a frontal attack, so this community ofnations decided to take positive action which mightbe an example to the world. It was the decision ofthe conference, expressed in its final resolution, that"’by the lowering or removal of barriers among them-selves the flow of trade between the various countriesof the Empire will be facilitated, and that by theconsequent increase of the purchasing power of theirpeoples the trade of the world will also be stimulatedor increased."

Defence

lurisdiction in defence matters is no more clear-cut than in economic questions. Thebasicprinciples of the defence of the Empire

are: each part shall provide, as far as it is able, for itsown defence, and its forces shall take part in thecommon defence of the commonwealth when and tothe extent its government and legislature so decide.This great Empire was not built up by, nor does itdepend upon, the use of military power. No largeforces are needed to keep it in subjection. Except intime of war, when armies have to be hastily impro-

vised, the military forces of the Empire are less thanthose of some European states of second rank. And,be it noted, when the existence of this Empire isthreatened, as in the last war and in this, its subjectsdo not seize the opportunity to revolt, but makegenerous and spontaneous sacrifices for its defence.

The British Empire has more to lose and less togain from war than any human organization everformed. It seeks above all tbe peaceful conduct ofworld trade, and the steady development of colonies.For Britain this war is not a question of conquest ofterritory, or of the rectification of frontiers, butdefence of a whole conception of life and of govern-ment. And what organization on a world scale couldhave been tested as searchingly in its inner loyalties,and so triumphed in the test, as the Empire in 1940 ?From the greatest and the smallest, from the strongestand the weakest, from the most advanced and themost simple, there flowed into London assurances thatEmpire countries would go down or come throughtogether. The fact that they are coming throughtogether is one of the facts that matter most in worldpolitics.

After theWar

When the war is won, what part will this Emp.ireplay in the world ? The exhaustionand paralysis of certain sections areso great that restoration must be a

slow process and-will be extremely difficult. Britainhas declared her willingness and eagerness to par-ticipate with like-minded nations in an effort to helpbuild in the world a security it has not heretoforeknown, and this spirit was confirmed at the recentconference in London. Perhaps UNRRA is a steptoward this objective, as the first international sharingof a major task with post-war implications. Thesignatories to that agreement are bound to work forrehabilitation of peoples occupying distressed coun-tries. It is a new conception of co-operation of allthe free world for the good of all mankind. And yet,is it so new ? The British Empire, after much experi-ment, adopted this method of mutual co-operation tosolve its problems, and proved that difficulties canbe solved by discussion where they certainly couldnever have been settled by force. All parts of thecommonwealth have accepted the principles of thecollective system for regulation of internationalrelations. The British Empire now assures justiceand liberty to one-fourth of the world’s population,and would, if it could, bring them peace and con-tentment also.

Since August 1942 Canada has been providing15,000 tons of cereals a month to Greece, and arepresentative of the Red Cross who was in charge ofadministration of relief in that country said thesefree gifts represent the difference between starvationand survival for half the population of Greece. Thegoodwill engendered by such acts is being extendedthrough UNRRA. The President of this bank saidlast January: "I personally believe that large outrightgifts of food, raw material, finished goods and ma-chinery to backward and devastated countries willin the long run, and even from the most selfish point

of view, not only contribute most to human welfare,but both in the short and long run be in the bestinterests of those nations which can afford to make thegifts." Out of such co-operation may grow a newconception of world affairs, in which even the leastidealistic nations may be compelled to take theirplace, seeking world welfare rather than individualaggrandisement.

Foremost anmng collaborators must, in the natureof things, be the British Empire and the UnitedStates. The community of friendship between thesetwo world organizations is founded upon community oflanguage, ideas and ideals. It is a good thing toconcentrate upon points of agreement, of which thereare many more than points of difference. It is, saidPrime Minister Churchill in April, practical to aspireto a closer functional unity within the Empire whileat the same time retaining association with the UnitedStates and others. "I have never conceived thatfraternal association with the United States wouldmilitate in any way against the unity of the BritishCommonwealth and Empire," he said, "or breed ill-feeling with our great Russian ally with whom we arebound by a 20-years treaty." On another occasionMr. Churchill declared the Empire seeks no narrowor selfish combination. "The tremendous and awe-inspiring fact stares the British and American de-mocracies between the eyes, ±hat acting together wecan help all nations safely into harbour, and that, ifwe divide, all will toss and drift for a long time ondark and stormy seas."

This war is not likely to end in the dominance of asupreme state or a group of supreme states. Theexperience of the Empire, detailed earlier in thisLetter, indicates the futility of such a plan. Progressfor individual states, and for the world, will resultfrom more intimate collaboration. To this the primeministers of the dominions, and the prime minister ofthe United Kingdom, have pledged their support.The Empire they represent is far from perfect, but itis being constantly improved because of the criticismof its own people through their press, parliaments andinstitutions. Throughout all its affairs blows thecleansing wind of democracy, based on freedom ofspeech, of religion, of the press, and of association.These are the fundamentals of the British Empire wayof life. The members of the Empire have faced everyquestion affecting race, religion and status, and bylong experience the Empire’s statesmen have acquiredboth the habit and spirit of toleration and justtreatment.

These are some of the reasons why the Empirestands. As Churchill phrased it: "How are allthese communities and races joined together ?Why is it they wend their way along the stony uphillroad in company ? There is only one answer to that:it is because they want to. In fact, they want to verymuch. If it were not so, there is no means to compelthem. But they want to. They want to not only inthe piping times of peace, but even more closely theydraw together in the most horrible shocks and agoniesof war.

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