702 REPORT— 1902. 



concurrent fluctuations in prices of home-grown and other flaxes are alluded to ; 

 as are also the exports of yarns and linens — the latter a gradually diminishing 

 quantity of late years. 



The importation of flax yarns into Ireland is increasing, while their export is 

 diminishing ; and this change has aflected the direction of trade. The effect of 

 the American war and consequent high prices of cotton on the linen trade, and 

 the reaction following that period of inflation, are traced ; and an attempt is made 

 to account for the recent decline in the linen industry of the world, in which 

 decline Ireland suffers much less than her British and Continentiil competitors. 



A new fabric, the Kneipp linen mesh underwear, is affording a fresh outlet for 

 yarn ; but still more variety is wanted in linen manufactures. 



The legitimate manufacturer is injured by the undue length and over-laxity of 

 credits. 



Wages and the housing of the operatives are discussed. 



2. A British Zollverein, or' Preferential Tariffs within the British Emjnre. 

 By His Honour Judge Shaw, K.C. 



There are two main proposals for establishing closer commercial relations 

 between the various parts of the Empire. One is a British Zollverein, or a General 

 Customs Union, which shall embrace every part of the Empire. The other is the 

 establishment of a system of tarifl's by Avhich the United Kingdom shall give 

 preferential advantages to the products of the Colonies and other parts of the 

 Empire, whilst the other parts of the Empire shall give similar advantages to the 

 products of the United Kingdom and of each other. 



It is very often assumed that these two proposals are similar in tendency and 

 effect. This is a total mistake. The two proposals are opposite to, and almost 

 contradictory of, each other. A British Customs Union would be a measure of Free 

 Trade, abolishing all Customs barriers and restrictions upon commerce within the 

 Empire. Preferential tarifts, on the other liand, are essentially Protective in their 

 tendency, and imply the existence of those barriers within the Empire which a 

 Customs Union would abolish. The two proposals, therefore, must be kept quite 

 distinct in our minds, and dealt with on entirely different lines. 



I. A British Zollverein would mean absolute freedom of trade within the whole 

 British Empire, a common Customs barrier as against all the rest of the world, and 

 no Customs or duties to be payable on transit from one part of the Empire to the 

 other. It is useless to consider whether this would be desirable until we have first 

 ascertained that it is practicable. It is at present wholly impracticable, for the 

 following reasons : — 



1. There is no common central authority within the Empire to regulate the 

 imposition of Customs duties, their collection, and their division among the various 

 parts of the Empire. 



2. A common Customs Avould necessitate also a common Excise within the 

 Empire. 



3. It would mean a complete break-up and rearrangement of the whole fiscal 

 system both of the United Kingdom and of the other parts of the Empire. Tea 

 from India, for example, could not be taxed in the United Kingdom, and manu- 

 factures from Great I3ritaiu could not be taxed in the Colonies. 



4. The Colonies are not prepared for Free Trade within the Empire, and have 

 decidedly rejected every proposal in that direction. 



II. The proposal for preferential tariffs takes two forms : — 



Firstly, there is the proposal to impose a uniform tax of 5 or 10 per cent, on all 

 foreign imports into any part of the British Empire. 



To this proposal there are three decisive objections : — 



I. As Sir R. Giffen has shown, an enormously large proportion of this tax 



