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John A. Hobson

Imperialism, A Study

PART I
THE ECONOMICS OF IMPERIALISM

Chapter II
The Commercial Value of Imperialism

The absorption of so large a proportion of public interest, energy, blood and money in seeking to procure colonial possessions and foreign markets would seem to indicate that Great Britain obtains her chief livelihood by external trade. Now this is not the case. Large as is our foreign and colonial trade in volume and in value, essential as is much of it to our national well-being, nevertheless it furnishes a small proportion of the real income of the nation.

Although the volume and value of home industries are not directly calculable, the total income of the nation, comprising profits, wages, rents, and other gains from all sources, is approximately estimated at £1,700,000,000 per annum. This sum, of course, covers all payments, not only for productive services of land, capital and labour in the making and distributing of material wealth, but for professional and personal services as well. Real income in the shape of goods or services to this amount is consumed or saved within the year.

Now the total value of the import and export trade of Great Britain in 1898 (we take this year as the latest normal one for the purpose, later years being disturbed by the war factor) amounted to £765,000,000. If we were to take the very liberal allowance of 5 per cent. as profit upon this turnover of trade, the annual income directly derived from our external trade would amount to a little over £38,000,000, or about one forty-fifth part of our total income.

If one is estimating the total income directly derived from taking part in processes of external trade, it would be necessary to add the salaries of commercial clerks, rents of offices, &c., paid by British mercantile firms engaged in this trade. Even then the total income derived from external trade would only play a small part in the total income of Great Britain.

“But surely,” it will be said, “you do not restrict the worth of our foreign trade to gains derived from the trading processes. The whole of the value of the exports of home produce, amounting in 1898 to £233,000,000 should be reckoned as income derived from or dependent on external trade for the purpose of this comparison, for it represents payments in the shape of profits, wages, rents, &c., made to persons in Great Britain who have produced the goods that are exported: destroy this export trade and you annihilate all this income.” This plausible presentation of the matter rests, however, upon shallow economic analysis. It is an excellent thing to have a wide and various foreign market, but we cannot admit that the capital and labour which made the export goods must have remained without employment if this foreign outlet for the goods they made had not existed. It is an advantage to our manufacturers that foreigners are willing to compete with home consumers for the purchase of their manufactures, and particular industries have grown and thriven by this enlargement of their market. The particular direction in which large quantities of capital and labour have been employed has been determined by these external markets. But we are not entitled to conclude that if this export trade had not grown up this capital and labour would have been without productive employment, though some of it must have been differently employed. The assumption that home demand is a fixed amount, and that any commodities produced in excess of this amount must find a foreign market or remain unsold, is quite unwarranted. On the contrary, there is no necessary limit to the quantity of capital and labour which can be employed in producing goods for the home market, if the productive power is disposed in industries which meet the rising demands of the consumer. Whatever quantity of wealth is produced in this country can be bought and consumed in this country, because with everything that is produced a corresponding power to purchase and consume is created. The pressure to find external markets, though urgent enough in many trades, is not based on any natural economic necessity. There is no natural limit to the quantity of wealth which can be produced, exchanged, and consumed within Great Britain except the limits imposed by restricted natural resources and the actual condition of the arts of industry. [12] Without, then, disputing the great utility of foreign trade to us, I would insist that the money income regarded as derived from foreign trade ought to be confined to the sum of the superior prices obtained for the goods sold abroad over those which could have been obtained for them (or for the goods which could have been produced in their place by the same factors of production) in the home market.

Whatever value such considerations justify us in setting upon the external trade of Great Britain, they do not justify the weight this trade exercises as a determinant of our commercial policy.

Moreover, it should be borne in mind that whereas during the first seven decades of the century, before any strong, definite, or continuous imperialistic policy was maintained, England’s foreign trade was advancing faster than her home trade, the three decades during which our public policy has been consciously dominated by a struggle for external markets show no increase in the value of our external trade comparable with the increase of our home trade. Between 1870 and 1898 the total income of the nation from all sources has grown from about £1,200,000,000 to £1,700,000,000. The following table gives the yearly figures of our import and export trade during that same period, the quinquennial average, and the value per head of the population:–

Although the real increase in volume of external trade is considerable when the fall of general prices since 1870 is taken into account, it is quite evident that neither the volume nor the value of external trade has kept pace during this period with the volume and the value of internal trade. While the total income per head of the population has certainly increased by as much as 20 per cent., the value of external trade per head has actually shrunk.

Next, let us inquire whether the vast outlay of energy and money upon imperial expansion is attended by a growing trade within the Empire as compared with foreign trade. In other words, does the policy tend to make us more and more an economically self-sufficing Empire? Does trade follow the flag?

The following figures represent the proportion which our trade with our colonies and possessions bears to our foreign trade during the latter half of the nineteenth century:–

A longer period has here been taken as a basis of comparison in order to bring out clearly the central truth, viz.that our modern imperialist policy has had no appreciable influence whatever upon the determination of our external trade. The proportion of our exports and our imports, as between foreign countries and our own possessions, is virtually the same in the first period, 1855-59, and the last period, 1895-98, nor, with one exception, has it varied widely during the entire half-century. That exception consists in a notable drop in the proportion of exports to our possessions in the period 1865-74; after the recovery from that depression, in 1875-79, there is no considerable change. Although since 1870 such vast additions have been made to British possessions, involving a corresponding reduction in the number or size of “foreign countries,” this imperial expansion is attended by no increase in the proportion of intra-imperial trade as represented in the imports and exports of Great Britain.

A somewhat closer study of the trade statistics of the last decade of the nineteenth century emphasises the recent tendency.

The elaborate statistical investigation of Professor Alleyne Ireland into the trade of our colonial possessions strikes a still heavier blow at the notion that trade follows the flag. Taking the same period, he establishes the following two facts:–

“The total import trade of all the British colonies and possessions has increased at a much greater rate than the imports from the United Kingdom.” “The total exports of all the British colonies and possessions have increased at a much greater rate than the exports to the United Kingdom.” [14]

The following table [15] shows the gradual decline in the importance to the colonies of the commercial connection with Great Britain since 1872-75, as illustrated in the proportion borne in the value of their exports from and their imports to Great Britain as compared with the value of the total imports and exports of the British colonies and possessions:–

In other words, while Great Britain’s dependence on her Empire for trade is stationary, the dependence of her Empire upon her for trade is rapidly diminishing.

Closer attention to the special period when imperial expansion has been in full activity – 1894 to the end of the century – enforces the lesson still more powerfully.

The actual condition of British trade with foreign countries and with the chief groups of the colonies respectively may be indicated by the following statement [16] for the year ending December 1901:–

It is thus clearly seen that while imperial expansion is attended by no increase in the value of our trade with our colonies and dependencies, a considerable increase in the value of our trade with foreign nations has taken place. Did space permit, it could be shown that the greatest increase of our foreign trade is with that group of industrial nations whom we regard as our industrial enemies, and whose political enmity we are in danger of arousing by our policy of expansion – France, Germany, Russia, and the United States.

Our import trade with the United States alone is greater than with the whole of our colonies. In 1898, the last normal year, the aggregate trade with foreign countries in British produce was £520,877,107, with our possessions £182,660,716. In 1898 the imports from the United States were £126,062,155, and from our possessions £99,433,995. The total imports were £470,544,702, so that the imports from our possessions constituted about one-fifth of the whole.

One more point of supreme significance in its bearing on the new Imperialism remains. We have already drawn attention to the radical distinction between genuine colonialism and Imperialism. This distinction is strongly marked in the statistics of the progress of our commerce with our foreign possessions.

The following table indicates the movement of our commerce during the last three decades of the nineteenth century with India, the technically self-governing colonies, and the other colonies respectively:–

Professor Flux thus summarises the chief result of this comparison: “The great source of growth of Britain’s colonial trade is very clearly shown to be the growth of trade with the colonies to which self-government has been granted. Their foreign trade has nearly doubled, and the proportion of it which is carried on with the mother country has increased from about 56½ per cent. to 65 per cent. “ This testimony of trade to the virtues of self-government cannot, however, be pressed very far, as is proved by classifying the same set of facts upon another fundamentum divisionis.

The distinction of self-governing and other colonies is almost identical with that between tropical and non-tropical colonies. The latter distinction, however, does not admit so much exactitude, though it is even more important in the instructive light it throws upon the economic character of Imperialism.

Regarded in a specifically political manner, Imperialism would seem confined to those colonies and possessions to which responsible self-government is denied, and which are governed by the will of Great Britain. But if due weight is assigned to economic as well as to formally political conditions, all possessions where the mass of the inhabitants enjoy no real share in such self-government as is accorded must be included. This extends the imperialist area so as to make it cover the important cases of Cape Colony and Natal, where the conditions are essentially lacking in popular self-government.

In this table the “other colonies” consist of Australasia, Canada, Newfoundland, the Channel Islands, Gibraltar, and Malta.

While the export trade to the whole number of colonies and possessions shows a slight absolute growth of value, having risen from £80,875,946 in 1884 to £83,426,761 in 1898, that between the mother country and the non-tropical possessions shows a considerable decline, more than compensated by the growth of trade with the tropical colonies. But further investigation makes it quite evident that this result and various others depend entirely upon the classification of Cape Colony and Natal, which rank for statistical purposes as pivotal colonies, carrying with them the balance of advantage to tropical and non-tropical, self-governing and imperialist States, according as we place them.

For during this period the exports to these South African colonies show an increase from £4,102,281 to £12,199,810. Hence, if these colonies, with their quite abnormal conditions, are excluded, the small rise of colonial exports as a whole becomes a considerable decline. If, having regard to the semi-tropical character of Natal, destined in all probability to be exploited chiefly by Coolie and Kaffir labour, and the great tropical hinterland fed by the trade of Cape Colony, we reckon these colonies in the tropical class, that entire class presents a favourable appearance as compared with the non-tropical colonies.

A strict interpretation of self-government will, by including Cape Colony and Natal (though the latter only obtained full self-government in 1893), throw the advantage on the side of the self-governing colonies, as against the imperially governed colonies. If, however, having regard to the virtual exclusion from all political power of the great majority of the population of these South African colonies, we refuse to rank them with Canada and Australasia, this argument for self-government on economic grounds disappears.

The real distinction which the facts and figures serve to emphasise is that between the tropical and the nontropical colonies; and their political bearing rests upon the fact that the new Imperialism is perforce driven more and more into the annexation and administration of tropical countries. Taking under survey our whole Empire, we reach the conclusion that, excluding our commerce with India, the smallest, least valuable, and most uncertain trade is that done with our tropical possessions, and in particular with those which have come under imperial control since 1870. The only considerable increase of our import trade since 1884 is from our genuine colonies in Australasia, North America, and Cape Colony; the trade with India has been stagnant, while that with our tropical colonies in Africa and the West Indies has been in most cases irregular and dwindling. Our export trade exhibits the same general character, save that Australia and Canada show a growing resolution to release themselves from dependence upon British manufactures; the trade with the tropical colonies, though exhibiting some increase, is very small and very fluctuating.

As for the territories acquired under the new Imperialism, except in one instance, no serious attempt to regard them as satisfactory business assets is possible. [17] Egypt alone yields a trade of some magnitude; of the other possessions, three only – Lagos, Niger Coast Protectorate, and North Borneo – are proved to do a trade with Great Britain exceeding one million pounds in value. In fact, excluding Egypt, the whole volume of this trade, so far as it is officially recorded, does not amount to ten million pounds; and though the actual trade is doubtless in excess of this sum, it forms an infinitesimal addition to the commercial resources of our nation. Apart from its quantity, the quality of the new tropical export trade is of the lowest, consisting for the most part, as the analysis of the Colonial Office shows, of the cheapest textile goods of Lancashire, the cheapest metal goods of Birmingham and Sheffield, and large quantities of gunpowder, spirits, and tobacco.

Such evidence leads to the following conclusions bearing upon the economics of the new Imperialism. First, the external trade of Great Britain bears a small and diminishing proportion to its internal industry and trade. Secondly, of the external trade, that with British possessions bears a diminishing proportion to that with foreign countries. Thirdly, of the trade with British possessions, the tropical trade, and in particular the trade with the new tropical possessions, is the smallest, least progressive, and most fluctuating in quantity, while it is lowest in the character of the goods which it embraces.

APPENDIX
Comparison of 18 Chief Exports

Part I, Chapter III

Notes

12. For the necessity, other than natural, which gives such great importance to foreign trade, see chap. vi.

13. This table, as distinguished from those following, is based on figures which include in the export trade only British and Irish produce, and do not include export of “foreign and colonial produce.𔄤

14. Page 125.

15. Founded on the tables of Professor Ireland (Tropical Civilisation, pp.98-101), and revised up to date from figures in the Statistical Abstract of Colonial Possessions, Cd. 307.

16. Cobden Club Leaflet, 123, by Harold Cox.

17. The following are the official figures, as far as accessible, of import and export trade with our recently acquired tropical or sub-tropical possessions for 1900 and for (1898):–

		Imports from	Exports to (including British, Colonial, and Foreign Merchandise)
		£	£
Cyprus		110,286	59,055
		(137,934)	(77,883)
Zanzibar and Pemba		195,480	78,876
		(154,437)	(122,072)
Other East African Territories (Somaliland, Uganda, East Africa Protectorate)		3,874	145,229
		(2,068)	(149,646)
Niger Coast Protectorate		987,717	808,557
		(377,545)	(706,206)
Egypt		12,585,578	6,159,468
		(8, 855,689)	(4,626,881)
Lagos		367,631	595,928
		(1,133,646)	(578,196)
Gambia		22,372	91,124
		(54,229)	(91,376)
British Central Africa Protectorate (1899)		[159,435]	[79,349]
North Borneo Company		3,885	12,119
		(1,601)	(15,859)
Malay Protectorate States (1899)		[11,200,000]	[6,800,000]
British New Guinea		250	1,626
		(190)	(1,049)
Fiji Islands		17,720	32,571
		(135)	(18,135)
Leeward Islands (1899)		60,210	148,020
Windward Islands (1899)		230,290	280,540

The present public value of some of our latest acquisitions in Africa is concisely indicated by the following official return of revenue and expenditure:–

The figures are taken from the annual accounts laid before Parliament by the Comptroller and Auditor-General, and from the Estimates of the Protectorates for the year 1901-2, the completed accounts not having yet been received.

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Last updated on 12.11.2006