To put the sugar industry of Cuba upon a sound basis does not require the removal of duties here, or such drastic measures as would prevent a fair and just return to our beet sugar and other producers upon their invested capital. But these interests are no longer dependent upon the present high Dingley rates a liberal reduction can now be made in our sugar schedules; and by continuing the present differential of 34 cents per one hundred pounds, our large and increasing export trade to the island can be held, through maintaining its leading industry in a sound and healthy condition.

Will our domestic producers allow such reduction, or will they, by pursuing the former policy of Spain, risk all, and bring about the very conditions of free trade which they are so anxious to avoid?

COMMERCIAL RELATIONS OF THE UNITED STATES WITH CANADA

BY JOHN BALL Osborne,

Chief, Bureau of Trade Relations, Department of State, Washington, D. C.

Nature is a most powerful ally in the development of the commercial relations between the United States and the Dominion of Canada. That great northland, with an area exceeding that of this country and with a population of six million energetic, ambitious souls, has enormous natural resources and is rightly spoken of by its statesmen and economists as a land of "almost infinite possibilities." With Canada the United States has many mutual interests and there is a marked homogeneity in the people of the two countries. A glance at the map must inevitably suggest that political arrangements frequently fail to follow rational commercial lines. A straight line connecting the northern boundaries of Minnesota and Maine will cut from the Dominion the richest and most populous portions of Ontario and Quebec, and, as a matter of fact, the commercial interests of the provinces along the American border are quite as intimately connected with those of the adjoining states as with each other. Thus, the maritime provinces are geographically related to New England; Ontario to New York, Pennsylvania, Ohio, and Michigan; Manitoba and the Northwest territories to Minnesota, North Dakota, and Montana; and British Columbia to our Pacific Coast states.

Under these favoring national conditions it might be expected that there would be the freest commercial intercourse between the two countries, the principal limitation being the law of supply and demand as regards American imports of Canadian natural products and the consuming ability of the Canadian people as regards the diversified exports of the United States. In a measure this is true. The commercial movement between the two countries is indeed extensive, as the statistics given below show; but it is not as intimate and important as it would be were it not for the operation of two great factors-colonial sentiment and tariff barriers. Sentiment alone figures very little in the determination of international

commerce; but in this case it was the colonial tie that inspired and created the preferential tariff system of Canada, and this is a factor that cannot be ignored.

In recent years the Dominion of Canada has come into the ranks of the commercial countries of the world. Its total trade in 1883 was $230,000,000; in 1893, it had risen to $248,000,000; in 1903, to $467,000,000, and in 1906 it exceeded $550,000,000.

The trade between the United States and Canada in each year since 1903 was as follows:

The importance of our trade with Canada is shown by the fact that in the fiscal year 1907 the value of the exports of American products to Canada was exceeded only by our exports to two countries, namely, the United Kingdom and Germany. Similarly in the same year our imports from Canada were exceeded in value by the imports from only five countries, namely, the United Kingdom, Germany, France, Cuba, and Brazil.

As might be expected, nearly everything that Canada sends to this country falls within the description of raw materials for manufactures or foodstuffs. The principal items making up our imports from Canada in 1907 were logs, lumber, and wood pulp; copper and nickel ores; hides, skins, and furs; fish and animals; and bituminous coal. These in fact, have been the classes of articles that have been most largely imported ever since the days of the reciprocity treaty.

As regards American exports to Canada, while there are many heavy items coming in the category of raw materials, such as coal, both anthracite and bituminous; raw cotton, cereals, leaf tobacco, fruits, etc., the bulk of the exportation represents manufactured articles, particularly iron and steel goods, agricultural implements, chemicals, railway material, carriages, paper, etc.

The interchange of the same articles of merchandise has always

been a noteworthy phenomenon in our trade with Canada. Thus, one article may be exclusively an import in one state along the border and an export in another, or its status may be determined by the condition of the crops. The principal articles which figure both as imports and exports are the following: animals, breadstuffs, copper, fish, fruits, hides and skins, and vegetables. There is considerable border traffic in vegetables in both directions, particularly in the northeast. The identity of some of these elements in the trade has more than once been advanced as an argument against reciprocity. Thus, when the Senate was considering, in 1865, the termination of the Marcy-Elgin treaty, Senator Conness, of California, exclaimed:

How you can make a treaty reciprocal between two countries lying contiguous to each other which have the same products, the same class of industries, I cannot exactly see. Subject the arrangement of that reciprocity to a treaty, or the mode furnished by a treaty, and you have simply an arrangement in which each party endeavors to cheat the other in making the agreement to be arrived at.

The following table, from official Canadian statistics, gives the total exports from Canada in specified years from 1868 to 1906, and the shares going to the United Kingdom and the United States. respectively:

1 From Tables of the Trade and Navigation of the Dominion of Canada.

It appears from the foregoing table that the mother country is the best customer of Canada and the United States the next best, the percentages in 1906 being respectively fifty-two and thirty-eight. The table indicates, too, that not since the early seventies has the United States been as extensive a purchaser of Canadian goods as the United Kingdom. This, perhaps, will be a surprise to many persons who have supposed that this country constitutes Canada's largest market.

It is more interesting and significant, however, to consider the imports for consumption into Canada for the same years as above given, with special reference to the United States and the United Kingdom. These figures are given in the following table from Canadian sources:2

Here we see that the conditions are precisely reversed in comparison with the statistics of exports from Canada, for the share of the imports from the United Kingdom has steadily declined from 50.9 per cent of the total in 1868 to 23.8 per cent in 1906, while the share of the imports from the United States has increased from 36.6 per cent to 60.6 per cent. These results are remarkable when it is remembered that the relative loss of the mother country and corresponding gain of the United States have been apparently in

2 From Tables of the Trade and Navigation of the Dominion of Canada.