remains that the bi-lateral autonomous tariff seems only applicable where the country adopting it offers a really valuable market. Here any difference in the tariff rates on the maximum-minimum scales is a consideration. Further, where a considerable loss is to be expected if all concessions were cut off, and where the country to whom concessions beyond the minimum are denied is unable to return to inflict proportional losses, then, in the event of a tariff war, I though both sides will no doubt suffer, the loss falls more heavily on the latter. Under the conditions laid down, in the event of resistance being offered, therefore the maximumminimum tariff of a country tends to be successful only against nations weaker than itself, or on much the same level of productive efficiency. In bargaining with a country stronger than itself, it represents merely a "first approximation to the final result. The maximum-minimum tariff seems, therefore, a doubtful weapon for weak powers to use, and it by no means follows that a strong power will be unable to gain its ends without the use of it, as the case of Germany sufficiently attests.1

§ 11. On political grounds, the autonomous forms of tariff offer, as we have just seen, distinct advantages. From the administrative standpoint, a double-line or multiple-line tariff involves the creation of safeguards against the use by the exporters of a country not entitled thereto of the benefits of the lower tariff rates. In effect, such administrative difficulties are to some extent overcome by the extension to large numbers of third states of the advantages of the lower rates by means of most-favoured-nation clauses. Nevertheless an elaborate system of consular invoices, certificates of origin, and so on has had to be developed. In general one may say that the administrative difficulties increase more than in proportion to the number of rates in a tariff. Thus, the multiple tariff if applied to a first class commercial nation would offer very great difficulties in enforcement. The reason for this is not far to seek. A large proportion of the goods of modern export industries are themselves produced from raw materials and components

1 Or with it, as the case of the threatened rupture between the U.S.A. and Canada after the passage of the Payne Aldrich Tariff of 1909 shows, though here political conditions in part explain the anxiety of the U.S.A. to come to a settleSee O.D. Skelton in "Canada and its Provinces," vol ix., pp. 220-224.

ment.

not of indigenous origin. Hence the definition of the country of origin" is an extremely vexatious matter. The larger the number of distinctions drawn-i.e., the greater the number of rates-the greater the difficulties of adequate determination. Thus, the multiple tariff suggested for the United Kingdom, "Colonies, Allies, neutrals, and enemies," would offer considerable administrative difficulties (besides bearing no necessary relation to economic importance, and thus accentuating the difficulty of negotiating reciprocal concessions). These difficulties are not necessarily insuperable, but they are nevertheless real. From this point of view, the single-rate tariff is certainly the most advantageous. As we will have in a later chapter to deal with the devices which administrative technique has evolved, here only the problems which all differentiation creates need be noted.

CHAPTER III.

THE INTERNAL FORM OF THE TARIFF.

(1) CLASSIFICATION AND ITS PROBLEMS.

§ I. In the previous chapter the external form of the tariff has been examined, and reasons were assigned for the divergencies of type which practice reveals. If we now turn our attention to the internal form of the tariff, we shall find divergencies to be much greater in this respect. Our first task must, therefore, be the reduction of these diverse forms to something like a consistent plan.

§ 2. Let us approach the problems of classification by answering the question, what is the purpose of classification in tariff matters? First of all it is a guide to the inquirer as to where he is to find the commodity and its rate in which |、 he happens to be interested. This is a minor, but still one object of classification: and one that, as it happens, cuts across other purposes for which classification is desirous. For the swiftest and most convenient classification from this point of view is simply an alphabetical enumeration of the) commodities. Next comes the convenience of the legislator. Tariffs as legislative enactments undergo discussion, and hence there is considerable utility in grouping together rates or commodities between which there is some logical nexus, so as to facilitate parliamentary procedure thereon. It is quite obvious that an alphabetical classification is here by no means so obviously desirable as was the case before.

Lastly, the tariff represents an attempt to carry out certain objective purposes, of which the most important are the raising of revenue, and the achievement of certain industrial

1 The problem of classification is generally treated as if it were a question of deciding under what rate a particular commodity is to be put (assimilation), or what the precise meaning of a given phrase (definition) is. These problems I treat separately in other chapters.

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reactions deemed desirable in the national interest. Classification, it is obvious on reflection, must be governed by these purposes, and hence we are faced not with mere problems of arrangement as such, but with the adjustment of means to ends. Modern tariff classification acquires all its importance from this fact, and the point is not always clearly recognised that the classification actually adopted may be inconsistent with the objects which it is hoped the tariff will achieve.

§3. Under modern circumstances and in most countries the revenue aspect of the tariff falls behind the protective or industrial aspect. Now, if we ask what broadly this aspect involves, we get the twofold answer that a tariff is partly an instrument for safeguarding the home or internal market, partly an instrument by means of which the home market of some country is to be opened, or, at any rate, prevented from being closed. But the range of commodities is nowa-days extremely great, and the divergencies of interest. between different groups of producers and consumers have grown correspondingly. These forces have resulted in a growing need for complexity in the form of the tariff, and their technical expression is an extreme specialisation of com-, modities and a great multiplicity of rates.

The problems of specialisation will receive attention in a later chapter, when the factors making for specialisation, will again be examined in more detail. It is desirable to insist on the fact that growing specialisation-i.e., an increase in the number of separately distinguishable or distinguished commodities implies also an increase in the number of separately distinguishable rates.

This, which is a matter of the greatest consequence, not always clearly realised.

Anticipating somewhat, let us discuss a concrete case. At first sight it appears indifferent whether commodities. are divided up into various classes, or whether a given number of rates are determined upon, between which the various goods are distributed. And so long as the number of classes either of rates or of goods are small, this is, on the whole, true in either case we get what is technically known as a "class rate." Thus, if we divide up all goods into foodstuffs,

1 On other grounds there may be disadvantages, and in any case classification on the basis of rates will not yield the same tariff form as classification on the basis of articles.

raw materials, semi-manufactured articles, and completely manufactured articles rated at a given rate for each class, there could be four classes and four rates; or four rates completely exhausting all goods between them.

Now suppose specialisation to take place on a large scale : so that not only are different kinds of foodstuffs, etc., distinguished from one another, but elaborate specialisation on the basis of alcoholic content and so forth is adopted. It is quite obvious that we can no longer start with the rates and divide the goods up among them on the other hand, to make this greater specialisation effective, rates must also become extremely specialised. In other words, that particular form of tariff which starts by classifying the rates and dividing up the goods among them is inconsistent with great specialisation but so also is any other classification on the basis of the goods themselves which is influenced by a desire to limit the number of rates, in the supposed interest, let us say, of simplicity. It follows from this that whilst the absolute number of articles may, under such a scheme, be large, and whilst an increase in the number of rates will tend to greater possibilities of specialisation, yet each step towards further specialisation can only be at the expense of simplicity, so that the limit to further specialisation comes earlier with some classifications than it does with others.

§ 4. One test then of a tariff classification is the ease with which it permits of specialisation, but this is by no means the only question to be asked about classification. Let us revert for a moment to the division of commodities we have already mentioned into four groups-i.e., foodstuffs, raw materials, semi-manufactured, and completely manufactured articles. It will be obvious on reflection that these categories really overlap-i.e., that the division is made partly on the basis of use, partly on the basis of finish. It is obvious that considerable difficulty may be experienced in deciding whether some commodity is or is not a raw material, whether it is or is not a completely manufactured article. If the rates are class rates. a decision on a point of this sort may make a great difference to the duty to be paid. If we think of the constant struggle of interests between the users of the particular commodity in question and the makers thereof, or the makers of substitutes therefor, it is obviously desirable that we should avoid, as far as possible, classifications which make the problem

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