A.—B

4

be arranged. A copy of the letter is appended. In some way, the want of arrangements of the kind must shortly be recognized. The Imperial Government have declined to accept the cession, of the Fiji group, and of other groups of islands in the Pacific. The consequence is, that, more or less near to the Australasian Colonies, foreign possessions are continuing to increase ; whilst concurrently the trade between them and the Australasian Colonies is also increasing. Tims, there are already the Fiji Islands, a yj&w&'-mdependent kingdom, and the Navigator group, likely to become a United States dependency ; and of older standing, there are the French Colonies of New Caledonia and Tahiti, the indepsndent kingdom of Hawaii, and the Dutch dependencies of Java and New Guinea. The necessity must, sooner or later, arise of regulating the relations between these countries and their Australasian neighbours; and it must be decided whether the Colonies are to act for themselves, or whether the Imperial Government is to act for them. To return to the question of simple Intercolonial Eeciprocity. Lord Kimberley seems to ridicule the idea of a Customs Union comprising the whole Empire, when he writes—" it may perhaps bo " thought that if it has been found impossible for adjacent communities, such as those of Australia, to " come to an agreement for a common system of Customs Duties, it is scarcely worth while to consider " the possibility of so vast a scheme as the combination of all parts of the British Empire, scattered " over the whole globe, under such widely-varying conditions of every kind, into one Customs Union." In fairness to himself, the Colonial Treasurer must point out, that Lord Kimberley scarcely does justice to the suggestions on which he comments; and that it is hardly accurate to say that it has been found impossible for adjacent communities, such as those of Australia, to arrive at an agreement for a common system of Customs Duties. Those communities have desired to arrive at such an agreement; but the opportunity has been denied them by the Imperial Government —that is to say, the Imperial Government have refused to allow them to make reciprocal arrangements. The Colonial Treasurer is surprised that suggestions such as those made by him are considered extravagant, since the theory involved in those suggestions has been enunciated by one who was recently Her Majesty's Prime Minister, Mr. Disraeli. The Colonial Treasurer wrote —'; If Great Britain were to confederate her " Empire, it might and probably would be a.condition, that throughout the Empire there should be a " free exchange of goods. The arguments in favour of a Customs Union between Colonies have as " much force in their application to a wider union, embracing the whole Empire." Again, " The " Colonial Treasurer submits that these questions really raise the issue, whether, in the original Con- " stitutions granted to them, the Colonies should have been allowed so much discretion as to fixing " their own Tariffs ; and, if this be the issue, the Treasurer admits that much may be said against the " discretion which has been granted. * * * In short, Great Britain must logically "do one of two things—either leave the Colonies unfettered discretion ; or —if she is to regulate Tariffs " or reciprocal Tariff arrangements, or to make Treaties affecting the Colonies—-give to the Colonies " representation in matters affecting the Empire." Six months after the Colonial Treasurer's Memorandum was written, and within a few weeks of the date of Lord Kimborley's Despatch, Mr. Disraeli, speaking at a meeting of the National Union of Conservative and Constitutional Associations, is reported to have said, " I cannot conceive how our distant Colonies can have their affairs administered " except by self-government; but, when self-government was conceded, it ought, in my opinion, to have " been conceded as part and parcel of a great Imperial Consolidation —it ought to have been accom- " panied by an Imperial Tariff. * * * It ought further to have been accompanied " by the institution of some Representative Council in the metropolis, which would have brought the " Colonies into constant and continuous relations with the Home Government. * * * " In my opinion, no Minister of this country will do his duty, who neglects any opportunity of recon- " structing as much as possible our Colonial Empire, and of responding to those distant sympathies " which may become the source of incalculable strength and happiness to this land." The Colonial Treasurer is content to think that he did not mean anything more extravagant than was propounded by Mr. Disraeli on the occasion referred to. Lord Kimberley states —" The New Zealand Government seem not to have perceived the difference " in principle between the formation of a Customs Union and the conclusion of reciprocity agree- ': ments." The Colonial Treasurer, in his former Memorandum, did not desire to assert that the principle of a Customs Union was the same as that of reciprocity agreements ; but he wished to suggest that the power to make reciprocal arrangements might lead to the Customs Union which it is believed the Secretary of State desires. The Treasurer is unable to see how this can be questioned. There cannot be a "Customs Union of the Australasian Colonies until it has been agreed what Tariff will be for their advantage, severally and collectively, or until Great Britain gives to them an Imperial Tariff. The latter, Lord Kimberley does not approve, and he questions the policy of giving to the Colonies a status which would enable them to enter into arrangements for a common Tariff. Had they the power to make reciprocal arrangements, a Tariff might be built up by common consent —which would amount to a Customs Union, requiring for its completion a final ratification only. But whilst the Colonies are prevented making reciprocal arrangements, their is little probability of their arriving at a common Tariff. Lord Kimberley considers that the desire of the Colonies to enter into reciprocal arrangementsamounts to setting up a claim "to treat the United Kingdom itself as a foreign community, by imposing differential duties in favour of other parts of the Empire, as against British produce." If the Secretary of State is entitled to consider in such a light reciprocal arrangements which the Colonies might make, he would be entitled to attach the same significance to a Customs Union of the Colonies ; for the effect of a Customs Union, through the free interchange of goods, would be to give to different parts of the Empire — id est, to separate Colonies —an interchange of goods free of duty, whilst the same goods from other parts of the Empire would be subject to duty. It is difficult to understand why it should be supposed that such an effect would be hostile to Great Britain if it resulted from reciprocal arrangements between Colonies, whilst it would not partake of such a character if it resulted from the operation of a Customs Union, unless it wore contemplated that the Customs Union should be the precursor of throwing off the Colonies from the Empire. Upon no other supposition is it conceivable that more serious disadvantage to Great Britain could flow from reciprocal arrangements between the