materials used in British contracts. He read the following letter, which he had received the week before from the Crown Agents for the Colonies, which was instructive as an example of the difficulties that had to be met:

"We recently had a case in which we placed an order for pumps with a firm of well-known English makers, but to our surprise we were afterwards told that the pumps were to be made in America by their American branch. This, I need not say, was not at all what we desired, and we are now adding to all our forms of engineering contracts the following phrases: 'In the case of stock materials not of British manufacture the place of origin must be stated when tendering. When it is proposed to manufacture the whole or any part of the work abroad the names and addresses of the proposed manufacturers, and a list of the parts proposed to be obtained from them, must be stated when tendering.' This formula is not suitable for ordinary store contracts, in which we are going to add: 'In the case of materials not of British manufacture the place of origin must be stated when tendering."

If that could be added to the contracts they would have knowledge on which to base possible future action. At present he was afraid that a certain number of contracts, given nominally to British firms, were made either of materials produced outside the Empire or were actually handed over by those British firms to branches or firms in alliance outside the Empire.

He outlined the practice of the Colonies and Protectorates, as it might serve as an encouragement to Great Britain and the Dominions to give them reciprocal treatment. Ever since the Colonial Conference of 1902 there had been an instruction to the Crown Agents for the Colonies, who worked under the Secretary of State for the Colonies and were the purchasing agents for Colonial Governments, to give effective preference to the products of the Empire over those of foreign countries. Their practice was to invite tenders from selected British firms only. Foreign firms. were only asked to tender in very exceptional circumstances, e.g., when some special article was required which was not produced at all in the Empire, or when it was necessary, as in the case of certain old telephone apparatus, that the parts required for renewal or expansion should correspond with the old apparatus already installed. The practice of the Crown Agents could stand examination. He gave the following example: The drug salvarsan was required for some of the Dependencies; a German firm made an offer to the Colonial Government at about half the price of the British article, but the Secretary of State had asked the Colonial Government to order their supplies of the drug from British manufacturers in spite of the difference in price. He felt that we had to develop, and if Governments, both State, provincial and local, set the example in this matter, private individuals might follow suit. He did not want to lay down a hard and fast rule, but at a time like this the public Departments throughout the Empire

should do all they could in the wording and framing of their contracts to secure the use of Empire materials and Empire products.

Colonial Contracts given to Dominions.

Mr. Amery said that in recent years a habit of the Crown Agents had been, not only to encourage Empire materials generally, but to encourage Empire finished manufactures. He gave several instances showing that the Administrations of the Colonies and Protectorates were anxious to help not only the interests of the Mother Country, but the interests of every part of the Empire.

Preference in Admiralty Contracts.

As regards the Admiralty, they gave a preference sufficiently substantial to eliminate, apart from oil, all but 1 per cent. of foreign purchases. They had been able finally to transfer their last purchases of Argentine meat to Australia, and all meat for the Admiralty now comes from Empire sources.

Canada's View.

Mr. Graham said that he could readily understand the difficulty of laying down any fixed stated percentage of preference. There must be flexibility. The interests of the taxpayer, in the part of the Empire dealing with preference, must be considered. It was essential, in his view, that the business men or those interested in every portion of the Empire should be given an opportunity to tender. He was strongly in favour of each part of the Empire (everything being approximately equal) giving a preference to every other part.

War Office Meat Contracts.

Lord Derby said that the War Office fully intended to give every possible preference to Empire goods. He assured the Conference that they took the whole of their frozen meat from Australia. and New Zealand, and with regard to preserved meat he quoted. the opinion of a deputation from the Commonwealth of Australia that the War Office had given the Dominions every consideration in connection with a recent tendering for preserved meat, over which there had been a publicity campaign adverse to the War Office. He pointed out certain difficulties in the way of giving preference which would be removed if the Dominion High Commissioners were able to have a guaranteed list of firms, whom they could recommend as sure to carry out a contract, and on whose behalf they would be able to sign if they were not otherwise directly represented in this country.

Principle already in operation in Australia, New Zealand and South Africa.

Senator Wilson said that the principle of preference in public contracts was already in operation in Australia, and that public bodies there gave preference at all times to goods produced within

the Empire. Quite apart from the question of the legal aspect of the tariff, the sentimental value of the preference given by Australia to Great Britain was estimated to be in the vicinity of £2,000,000, and he, personally, thought that that figure was considerably underestimated.

Mr. Massey said that New Zealand had been working on the principle of preference in public contracts for a long time past.

Mr. Burton found himself in substantial agreement with what had been said by the Chancellor of the Exchequer and by Mr. Graham. In South Africa preference had been given for some time past. He pointed out that on previous occasions this subject. had been discussed and general agreement arrived at, but it had not been thought necessary to take any resolution; as they were all in agreement about the principle, it was really only a question of carrying it out. He thought it was unnecessary to pass a resolution, but would be glad to examine any proposal which might be submitted.

Mr. Riordan said that he did not desire to express any definite views in this subject; that a Fiscal Enquiry Committee had been appointed by his Government and was sitting at the present moment; that until the Committee referred to had concluded its investigations, and reported, and the Irish Free State Government had considered the report, the Irish representatives at the Conference must reserve judgment concerning questions of tariffs, Imperial Preference, and matters such as these.

Mr. Warren also expressed himself in favour of the principle of preference, which was in accordance with the practice of Newfoundland.

Difficulties to India's Acceptance of Resolution.

Mr. Innes said that two distinct classes of cases were indicated. In one the raw material itself was the subject of a contract. That case did not cause much difficulty in India, as most of their raw materials required for such contracts were obtained in India. Still, there were difficulties, as instanced by the case of sugar. They could not grow all the sugar they required, and large quantities were imported from their nearest neighbour, Java. Owing to the geographical situation of India, expenditure on the army in India swallowed a very large portion of their revenue, and they had had to take very drastic steps recently to reduce that expenditure. The army required large quantities of sugar, and the Government of India in such circumstances would not be justified in incurring increased expenditure by purchasing their imported sugar from within the Empire at a higher cost than Java sugar.

Frocedure for Purchase of Indian Government Stores.

That class of case, however, presented much less difficulty than the case in which the raw material involved was only an ingredient

in a manufactured article. The Government of India were required by rule to buy their imported stores through their Store Department in London, which was under the control of the High Commissioner for India. Such purchase was on a very large scale, involving annually many millions of pounds, and they had had to lay down the rule that purchases must be made in accordance with strict business principles. In other words, the High Commissioner had to accept the lowest satisfactory tender; not necessarily the cheapest. tender, for he had been given wide latitude to take into consideration such matters as ease of inspection, reliability and other matters of a similar character. Owing to the superiority of the British manufacturer the practical result had been that between 90 and 95 per cent. of the value of purchases made through the High Commissioner during the past year had been expended in England on articles. produced by British manufacturers. As a result of the debate which took place recently in the House of Commons, the action taken by the Government of India in that matter had been endorsed by the House without a division.

There were, further, practical difficulties in the way of carrying out instructions to use only Empire materials in manufacture. They would find it very difficult to satisfy themselves, for instance, that only Empire-produced manganese had actually been used in a girder, or that linseed oil used in the manufacture of any particular paint had been produced within the Empire. The work of their Inspectors would be very seriously complicated by such instructions. Any resolution which they might wish to pass to that effect would be unworkable in practice.

He was quite prepared to consult the Government of India regarding the terms of any resolution that might be moved, but could not go further than that.

Earl Winterton wished only to add on behalf of India, that, in addition to purchasing in England the large proportion of her requirements in the shape of Government stores which had been indicated by Mr. Innes, she was on private account one of the best customers that Great Britain had.

Resolution.

The Conference decided to adjourn the discussion, so that a Resolution might be drafted which should give expression to the views of the Conference in regard to the principle of preference in Government Contracts, on the question of the materials used in carrying out contracts of Empire production, and on the question of those contracts which fall within the province of State, provincial and local authorities. The following Resolution was accordingly tabled at the Twenty-first Meeting, held on Wednesday, the 7th November, 1923, and adopted :—

"1. That this Imperial Economic Conference reaffirms the principle that in all Government contracts effective preference be given to goods made and materials produced within the Empire

except where undertakings entered into prior to this Conference preclude such a course or special circumstances render it undesirable or unnecessary.

"2. That so far as practicable, efforts be made to ensure that the materials used in carrying out contracts be of Empire production.

"3. That State, provincial and local government authorities should be encouraged to take note of the foregoing resolutions."