I am indebted to the editor of the "Financial Reform Almanac" for permission to reproduce the valuable diagram illustrative of British expenditure from 1870, and to the editors of the Speaker, the Contemporary Review, the Political Science Quarterly, and the British Friend for permission to embody in chapters of this volume articles printed in these magazines.

Those readers who hold that a well-balanced judgment consists in always finding as much in favour of any political course as against it will be discontented with the treatment given here. For the study is distinctively one of social pathology, and no endeavour is made to disguise the malignity of the disease.

The book is addressed to the intelligence of the minority who are content neither to float along the tide of political opportunism nor to submit to the shove of some blind "destiny," but who desire to understand political forces in order that they may direct them.

Part II. investigates the theory and the practice of Imperialism regarded as a "mission of civilisation," in its effects upon "lower" or alien peoples, and its political and moral reactions upon the conduct and character of the Western nations engaging in it.

While an attempt is made to discover and discuss the general principles which underlie imperialist policy, the illustration of that policy is mainly derived from the progress of British Imperialism during the last generation, and proceeds rather by diagnosis than by historical description.

This study of modern Imperialism is designed to give more precision to a term which is on everybody's lips and which is used to denote the most powerful movement in the current politics of the Western world. Though Imperialism has been adopted as a more or less conscious policy by several European States and threatens to break down the political isolation of the United States, Great Britain has travelled so much faster and farther along this road as to furnish in her recent career the most profitable guidance or warning.

The scramble for Africa and Asia has virtually recast the policy of all European nations, has evoked alliances which cross all natural lines of sympathy and historical association, has driven every continental nation to consume an ever-growing share of its material and human resources upon military and naval equipment, has drawn the great new power of the United States from its isolation into the full tide of competition; and, by the multitude, the magnitude, and the suddenness of the issues it throws on to the stage of politics, has become a constant agent of menace and of perturbation to the peace and progress of mankind. The new policy has exercised the most notable and formidable influence upon the conscious statecraft of the nations which indulge in it. While producing for popular consumption doctrines of national destiny and imperial missions of civilisation, contradictory in their true import, but subsidiary to one another as supports of popular Imperialism, it has evolved a calculating, greedy type of Macchiavellianism, entitled "real-politik" in Germany, where it was made, which has remodelled the whole art of diplomacy and has erected national aggrandisement without pity or scruple as the conscious motive force of foreign policy. Earth hunger and the scramble for markets are responsible for the openly avowed repudiation of treaty obligations which Germany, Russia, and England have not scrupled to defend. The sliding scale of diplomatic language, hinterland, sphere of interest, sphere of influence, paramountcy, suzerainty, protectorate, veiled or open, leading up to acts of forcible seizure or annexation which sometimes continue to be hidden under "lease," "rectification of frontier," "concession," and the like, is the invention and expression of this cynical spirit of Imperialism. While Germany and Russia have perhaps been more open in their professed adoption of the material gain of their country as the sole criterion of public conduct, other nations have not been slow to accept the standard. Though the conduct of nations in dealing with one another has commonly been determined at all times by selfish and short-sighted considerations, the conscious, deliberate adoption of this standard at an age when the intercourse of nations and their interdependence for all essentials of human life grow ever closer is a retrograde step fraught with grave perils to the cause of civilisation.

The overflow of nationalism into imperial channels quenched all such hopes. While co-existent nationalities are capable of mutual aid involving no direct antagonism of interests, co-existent empires following each its own imperial career of territorial and industrial aggrandisement are natural necessary enemies. The full nature of this antagonism on its economic side is not intelligible without a close analysis of those conditions of modern capitalist production which compel an ever keener "fight for markets," but the political antagonism is obvious.

Not only does aggressive Imperialism defeat the movement towards internationalism by fostering animosities among competing empires: its attack upon the liberties and the existence of weaker or lower races stimulates in them a corresponding excess of national self-consciousness. A nationalism that bristles with resentment and is all astrain with the passion of self-defence is only less perverted from its natural genius than the nationalism which glows with the animus of greed and self-aggrandisement at the expense of others. From this aspect aggressive Imperialism is an artificial stimulation of nationalism in peoples too foreign to be absorbed and too compact to be permanently crushed. We have welded Africanderdom into just such a strong dangerous nationalism, and we have joined with other nations in creating a resentful nationalism hitherto unknown in China. The injury to nationalism in both cases consists in converting a cohesive, pacific, internal force into an exclusive, hostile force, a perversion of the true power and use of nationality. The worst and most certain result is the retardation of internationalism. The older nationalism was primarily an inclusive sentiment; its natural relation to the same sentiment in another people was lack of sympathy, not open hostility; there was no inherent antagonism to prevent nationalities from growing and thriving side by side. Such in the main was the nationalism of the earlier nineteenth century, and the politicians of Free Trade had some foundation for their dream of a quick growth of effective, informal internationalism by peaceful, profitable intercommunication of goods and ideas among nations recognising a just harmony of interests in free peoples.

Nationalism is a plain highway to internationalism, and if it manifests divergence we may well suspect a perversion of its nature and its purpose. Such a perversion is Imperialism, in which nations trespassing beyond the limits of facile assimilation transform the wholesome stimulative rivalry of varied national types into the cut-throat struggle of competing empires.

Thus the triumph of nationalism seems to have crushed the rising hope of internationalism. Yet it would appear that there is no essential antagonism between them. A true strong internationalism in form or spirit would rather imply the existence of powerful self-respecting nationalities which seek union on the basis of common national needs and interests. Such a historical development would be far more conformable to laws of social growth than the rise of anarchic cosmopolitanism from individual units amid the decadence of national life.

This early flower of humane cosmopolitanism was destined to wither before the powerful revival of nationalism which marked the next century. Even in the narrow circles of the cultured classes it easily passed from a noble and a passionate ideal to become a vapid sentimentalism, and after the brief flare of 1848 among the continental populace had been extinguished, little remained but a dim smouldering of the embers. Even the Socialism which upon the continent retains a measure of the spirit of internationalism is so tightly confined within the national limits, in its struggle with bureaucracy and capitalism, that "the international" expresses little more than a holy aspiration, and has little opportunity of putting into practice the genuine sentiments of brotherhood which its prophets have always preached.

Thus empire was identified with internationalism, though not always based on a conception of equality of nations. The break-up of the Central European Empire, with the weakening of nationalities that followed, evoked a new modern sentiment of internationalism which, through the eighteenth century, was a flickering inspiration in the intellectual circles of European States. "The eve of the French Revolution found every wise man in Europe—Lessing, Kant, Goethe, Rousseau, Lavater, Condorcet, Priestley, Gibbon, Franklin—more of a citizen of the world than of any particular country. Goethe confessed that he did not know what patriotism was, and was glad to be without it. Cultured men of all countries were at home in polite society everywhere. Kant was immensely more interested in the events of Paris than in the life of Prussia. Italy and Germany were geographical expressions; those countries were filled with small States in which there was no political life, but in which there was much interest in the general progress of culture. The Revolution itself was at bottom also human and cosmopolitan. It is, as Lamartine said, 'a date in the human mind,' and it is because of that fact that all the carping of critics like Taine cannot prevent us from seeing that the character of the men who led the great movements of the Revolution can never obliterate the momentous nature of the Titanic strife. The soldiers of the Revolution who, barefooted and ragged, drove the insolent reactionaries from the soil of France were fighting not merely for some national cause, but for a cause dimly perceived to be the cause of general mankind. With all its crudities and imperfections, the idea of the Revolution was that of a conceived body of Right in which all men should share."

The novelty of the recent Imperialism regarded as a policy consists chiefly in its adoption by several nations. The notion of a number of competing empires is essentially modern. The root idea of empire in the ancient and mediæval world was that of a federation of States, under a hegemony, covering in general terms the entire known or recognised world, such as was held by Rome under the so-called pax Romana. When Roman citizens, with full civic rights, were found all over the explored world, in Africa and Asia, as well as in Gaul and Britain, Imperialism contained a genuine element of internationalism. With the fall of Rome this conception of a single empire wielding political authority over the civilised world did not disappear. On the contrary, it survived all the fluctuations of the Holy Roman Empire. Even after the definite split between the Eastern and Western sections had taken place at the close of the fourth century, the theory of a single State, divided for administrative purposes, survived. Beneath every cleavage or antagonism, and notwithstanding the severance of many independent kingdoms and provinces, this ideal unity of the empire lived. It formed the conscious avowed ideal of Charlemagne, though as a practical ambition confined to Western Europe. Rudolph of Habsburg not merely revived the idea, but laboured to realise it through Central Europe, while his descendant Charles V. gave a very real meaning to the term by gathering under the unity of his imperial rule the territories of Austria, Germany, Spain, the Netherlands, Sicily, and Naples. In later ages this dream of a European Empire animated the policy of Peter the Great, Catherine, and Napoleon. Nor is it impossible that Kaiser Wilhelm III. holds a vision of such a world-power.

Colonialism, in its best sense, is a natural overflow of nationality; its test is the power of colonists to transplant the civilisation they represent to the new natural and social environment in which they find themselves. We must not be misled by names; the "colonial" party in Germany and France is identical in general aim and method with the "imperialist" party in England, and the latter is the truer title. Professor Seeley well marked the nature of Imperialism. "When a State advances beyond the limits of nationality its power becomes precarious and artificial. This is the condition of most empires, and it is the condition of our own. When a nation extends itself into other territories the chances are that it cannot destroy or completely drive out, even if it succeeds in conquering, them. When this happens it has a great and permanent difficulty to contend with, for the subject or rival nationalities cannot be properly assimilated, and remain as a permanent cause of weakness and danger."

Colonialism, where it consists in the migration of part of a nation to vacant or sparsely peopled foreign lands, the emigrants carrying with them full rights of citizenship in the mother country, or else establishing local self-government in close conformity with her institutions and under her final control, may be considered a genuine expansion of nationality, a territorial enlargement of the stock, language and institutions of the nation. Few colonies in history have, however, long remained in this condition when they have been remote from the mother country. Either they have severed the connection and set up for themselves as separate nationalities, or they have been kept in complete political bondage so far as all major processes of government are concerned, a condition to which the term Imperialism is at least as appropriate as colonialism. The only form of distant colony which can be regarded as a clear expansion of nationalism is the self-governing British colony in Australasia and Canada, and even in these cases local conditions may generate a separate nationalism based on a strong consolidation of colonial interests and sentiments alien from and conflicting with those of the mother nation. In other "self-governing" colonies, as in Cape Colony and Natal, where the majority of whites are not descended from British settlers, and where the presence of subject or "inferior" races in vastly preponderating numbers, and alien climatic and other natural conditions, mark out a civilisation distinct from that of the "mother country," the conflict between the colonial and the imperial ideas has long been present in the forefront of the consciousness of politicians. When Lord Rosmead spoke of the permanent presence of the imperial factor as "simply an absurdity," and Mr. Rhodes spoke of its "elimination," they were championing a "colonialism" which is more certain in the course of time to develop by inner growth into a separate "nationalism" than in the case of the Australasian and Canadian colonies, because of the wider divergence, alike of interests and radical conditions of life, from the mother nation. Our other colonies are plainly representative of the spirit of Imperialism rather than of colonialism. No considerable proportion of the population consists of British settlers living with their families in conformity with the social and political customs and laws of their native land: in most instances they form a small minority wielding political or economic sway over a majority of alien and subject people, themselves under the despotic political control of the Imperial Government or its local nominees. This, the normal condition of a British colony, is well-nigh universal in the colonies of other European countries. The "colonies" which France and Germany establish in Africa and Asia are in no real sense plantations of French and German national life beyond the seas; nowhere, not even in Algeria, do they represent true European civilisation; their political and economic structure of society is wholly alien from that of the mother country.

It is a debasement of this genuine nationalism, by attempts to overflow its natural banks and absorb the near or distant territory of reluctant and unassimilable peoples, that marks the passage from nationalism to a spurious colonialism on the one hand, Imperialism on the other.

"A portion of mankind may be said to constitute a nation if they are united among themselves by common sympathies which do not exist between them and others. This feeling of nationality may have been generated by various causes. Sometimes it is the effect of identity of race and descent. Community of language and community of religion greatly contribute to it. Geographical limits are one of the causes. But the strongest of all is identity of political antecedents, the possession of a national history and consequent community of recollections, collective pride and humiliation, pleasure and regret, connected with the same incidents in the past."

Turning from this territorial and dynastic nationalism to the spirit of racial, linguistic, and economic solidarity which has been the underlying motive, we find a still more remarkable movement. Local particularism on the one hand, vague cosmopolitanism upon the other, yielded to a ferment of nationalist sentiment, manifesting itself among the weaker peoples not merely in a sturdy and heroic resistance against political absorption or territorial nationalism, but in a passionate revival of decaying customs, language, literature, and art; while it bred in more dominant peoples strange ambitions of national "destiny" and an attendant spirit of Chauvinism.

This passion and the dynastic forms it helped to mould and animate are largely attributable to the fierce prolonged resistance which peoples, both great and small, were called on to maintain against the imperial designs of Napoleon. The national spirit of England was roused by the tenseness of the struggle to a self-consciousness it had never experienced since "the spacious days of great Elizabeth." Jena made Prussia into a great nation; the Moscow campaign brought Russia into the field of European nationalities as a constant factor in politics, opening her for the first time to the full tide of Western ideas and influences.

The close of the third quarter of the century saw Europe fairly settled into large national States or federations of States, though in the nature of the case there can be no finality, and Italy still looks to Trieste, as Germany to Austria, for the fulfilment of her manifest destiny.

The middle of the century was especially distinguished by a series of definitely "nationalist" revivals, some of which found important interpretation in dynastic changes, while others were crushed or collapsed. Holland, Poland, Belgium, Norway, the Balkans, formed a vast arena for these struggles of national forces.

It is true that the forces making for political union have sometimes gone further, making for federal union of diverse nationalities, as in the cases of Austria-Hungary, Norway and Sweden, and the Swiss Federation. But the general tendency has been towards welding into large strong national unities the loosely related States and provinces with shifting attachments and alliances which covered large areas of Europe since the break-up of the Empire. This has been the most definite achievement of the nineteenth century. The force of nationality, operating in this work, is quite as visible in the failures to achieve political freedom as in the successes; and the struggles of Irish, Poles, Finns, Hungarians, and Czechs to resist the forcible subjection to or alliance with stronger neighbours brings out in its full vigour the powerful sentiment of nationality.

During the nineteenth century the struggle towards nationalism, or establishment of political union on a basis of nationality, has been a dominant factor alike in dynastic movements and as an inner motive in the life of masses of population. That struggle, in external politics, has sometimes taken a disruptive form, as in the case of Greece, Servia, Roumania, and Bulgaria breaking from Ottoman rule, and the detachment of North Italy from her unnatural alliance with the Austrian Empire. In other cases it has been a unifying or a centralising force, enlarging the area of nationality, as in the case of Italy and the Pan-Slavist movement in Russia. Sometimes nationality has been taken as a basis of federation of States, as in United Germany and in North America.

Amid the welter of vague political abstractions to lay one's finger accurately upon any "ism" so as to pin it down and mark it out by definition seems impossible. Where meanings shift so quickly and so subtly, not only following changes of thought, but often manipulated artificially by political practitioners so as to obscure, expand, or distort, it is idle to demand the same rigour as is expected in the exact sciences. A certain broad consistency in its relations to other kindred terms is the nearest approach to definition which such a term as Imperialism admits. Nationalism, internationalism, colonialism, its three closest congeners, are equally elusive, equally shifty, and the changeful overlapping of all four demands the closest vigilance of students of modern politics.

PART I

THE ECONOMICS OF IMPERIALISM

Part I, Chapter I: The Measure of Imperialism Quibbles about the modern meaning of the term Imperialism are best resolved by reference to concrete facts in the history of the last thirty years. During that period a number of European nations, Great Britain being first and foremost, have annexed or otherwise asserted political sway over vast portions of Africa and Asia, and over numerous islands in the Pacific and elsewhere. The extent to which this policy of expansion has been carried on, and in particular the enormous size and the peculiar character of the British acquisitions, are not adequately realised even by those who pay some attention to Imperial politics. The following lists, giving the area and, where possible, the population of the new acquisitions, are designed to give definiteness to the term Imperialism. Though derived from official sources, they do not, however, profess strict accuracy. The sliding scale of political terminology along which no-man's land, or hinterland, passes into some kind of definite protectorate is often applied so as to conceal the process; "rectification" of a fluid frontier is continually taking place; paper "partitions" of spheres of influence or protection in Africa and Asia are often obscure, and in some cases the area and the population are highly speculative. In a few instances it is possible that portions of territory put down as acquired since 1870 may have been ear-marked by a European Power at some earlier date. But care is taken to include only such territories as have come within this period under the definite political control of the Power to which they are assigned. The figures in the case of Great Britain are so startling as to call for a little further interpretation. I have thought it right to add to the recognised list of colonies and protectorates the "veiled Protectorate" of Egypt, with its vast Soudanese claim, the entire territories assigned to Chartered Companies, and the native or feudatory States in India which acknowledge our paramountcy by the admission of a British Agent or other official endowed with real political control. All these lands are rightly accredited to the British Empire, and if our past policy is still pursued, the intensive as distinct from the extensive Imperialism will draw them under an ever-tightening grasp. In a few other instances, as, for example, in West Africa, countries are included in this list where some small dominion had obtained before 1870, but where the vast majority of the present area of the colony is of recent acquisition. Any older colonial possession thus included in Lagos or Gambia is, however, far more than counterbalanced by the increased area of the Gold Coast Colony, which is not included in this list, and which grew from 29,000 square miles in 1873 to 39,000 square miles in 1893. Date of Acquisition. Area. Square Miles. Population. EUROPE— Cyprus 1878 3,584 227,900 AFRICA— Zanzibar and Pemba 1888 100,000 200,000 East Africa Protectorate 1895 2,500,000 Uganda Protectorate 1894-1896 140,000 3,800,000 Somali Coast Protectorate 1884-1885 68,000 (?) British Central Africa Protectorate 1889 42,217 688,049 Lagos to 1899 21,000 3,000,000 Gambia to 1888 3,550 215,000 Ashantee 1896-1901 70,000 2,000,000 Niger Coast Protectorate 1885-1898 400,000 to 500,000 25,000,000 to 40,000,000 Egypt 1882 400,000 9,734,405 Egyptian Soudan 1882 950,000 10,000,000 Griqualand West 1871-1880 15,197 83,373 Zululand 1879-1897 10,521 240,000 British Bechuanaland 1885 51,424 72,736 Bechuanaland Protectorate 1891 213,000 200,000 Transkei 1879-1885 2,535 153,582 Tembuland 1885 4,155 180,130 Pondoland 1894 4,040 188,000 Griqualand East 1879-1885 7,511 152,609 British South Africa Charter 1889 750,000 321,000 Transvaal 1900 119,139 870,000 Orange River Colony 1900 48,826 207,503 ASIA— Hong Kong (littoral) 1898 376 100,000 Wei-hai-wei ... 270 118,000 Socotra 1886 1,382 10,000 Upper Burma 1887 83,473 2,046,933 Baluchistan 1876-1889 130,000 500,000 Sikkim 1890 2,818 30,000 Rajputana (States) since 1881 128,022 12,186,352 Burma (States) 62,661 785,800 Jammu and Kashmir 80,000 2,543,952 Malay Protected States 1883-1895 24,849 620,000 North Borneo Company 1881 31,106 175,000 North Borneo Protectorate 1888 ... ... Sarawak 1888 50,000 500,000 British New Guinea 1888 90,540 350,000 Fiji Islands 1874 7,740 122,676 The list is by no means complete. It takes no account of several large regions which have passed under the control of our Indian Government as native or feudatory States, but of which no statistics of area or population, even approximate, are available. Such are the Shan States, the Burma Frontier, and the Upper Burma Frontier, the districts of Chitral, Bajam, Swat, Waziristan, which came under our "sphere of influence" in 1893, and have been since taken under a closer protectorate. The increase of British India itself between 1871 and 1891 amounted to an area of 104,993 square miles, with a population of 25,330,000, while no reliable measurement of the formation of new native States within that period and since is available. Many of the measurements here given are in round numbers, indicative of their uncertainty, but they are taken, wherever available, from official publications of the Colonial Office, corroborated or supplemented from the "Statesman's Year-book." They will by no means comprise the full tale of our expansion during the thirty years, for many enlargements made by the several colonies themselves are omitted. But taken as they stand they make a formidable addition to the growth of an Empire whose nucleus is only 120,000 square miles, with 40,000,000 population. For so small a nation to add to its domains in the course of a single generation an area of 4,754,000 square miles, with an estimated population of 88,000,000, is a historical fact of great significance. Accepting Sir Robert Giffen's estimate of the size of our Empire (including Egypt and the Soudan) at about 13,000,000 square miles, with a population of some 400 to 420 millions (of whom about 50,000,000 are of British race and speech), we find that one-third of this Empire, containing quite one-fourth of the total population of the Empire, has been acquired within the last generation. This is in tolerably close agreement with other independent estimates. The character of this Imperial expansion is clearly exhibited in the list of new territories. Though, for convenience, the year 1870 has been taken as indicative of the beginning of a conscious policy of Imperialism, it will be evident that the movement did not attain its full impetus until the middle of the eighties. The vast increase of territory, and the method of wholesale partition which assigned to us great tracts of African land, may be dated from about 1884. Within fifteen years some three and three-quarter millions of square miles have been added to the British Empire. Nor does Great Britain stand alone in this enterprise. The leading characteristic of modern Imperialism, the competition of rival Empires, is the product of this same period. The close of the Franco-German war marks the beginning of a new colonial policy in France and Germany, destined to take effect in the next decade. It was not unnatural that the newly-founded German Empire, surrounded by powerful enemies and doubtful allies, and perceiving its more adventurous youth drawn into the United States and other foreign lands, should form the idea of a colonial empire. During the seventies a vigorous literature sprang up in advocacy of the policy which took shape a little later in the powerful hands of Bismarck. The earliest instance of official aid for the promotion of German commerce abroad occurred in 1880 in the Government aid granted to the "German Commercial and Plantation Association of the Southern Seas." German connection with Samoa dates from the same year, but the definite advance of Germany upon its Imperialist career began in 1884, with a policy of African protectorates and annexations of Oceanic islands. During the next fifteen years she brought under her colonial sway about 1,000,000 square miles, with an estimated population of 14,000,000. Almost the whole of this territory is tropical, and the white population forms a total of a few thousands. Similarly in France a great revival of the old colonial spirit took place in the early eighties, the most influential of the revivalists being the eminent economist, M. Paul Leroy-Beaulieu. The extension of empire in Senegal and Sahara in 1880 was followed next year by the annexation of Tunis, and France was soon actively engaged in the scramble for Africa in 1884, while at the same time she was fastening her rule on Tonking and Laos in Asia. Her acquisitions since 1880 (exclusive of the extension of New Caledonia and its dependencies) amount to an area of over three and a half million square miles, with a native population of some 37,000,000, almost the whole tropical or sub-tropical, inhabited by lower races and incapable of genuine French colonisation. Italian aspirations took similar shape from 1880 onwards, though the disastrous experience of the Abyssinian expeditions has given a check to Italian Imperialism. Her possessions in East Africa are confined to the northern colony of Eritrea and the protectorate of Somaliland. Of the other European States, two only, Portugal and Belgium, enter directly into the competition of the new Imperialism. The African arrangements of 1884-6 assigned to Portugal the large district of Angola on the Congo Coast, while a large strip of East Africa passed definitely under her political control in 1891. The anomalous position of the great Congo Free State, ceded to the King of Belgium in 1883, and growing since then by vast accretions, must be regarded as involving Belgium in the competition for African empire. Spain may be said to have definitely retired from imperial competition. The large and important possessions of Holland in the East and West Indies, though involving her in imperial politics to some degree, belong to older colonialism: she takes no part in the new imperial expansion. Russia, the only active expansionist country of the North, stands alone in the character of her imperial growth, which differs from other Imperialism in that it has been principally Asiatic in its achievements and has proceeded by direct extension of imperial boundaries, partaking to a larger extent than in the other cases of a regular colonial policy of settlement for purposes of agriculture and industry. It is, however, evident that Russian expansion, though of a more normal and natural order than that which characterises the new Imperialism, comes definitely into contact and into competition with the claims and aspirations of the latter in Asia, and has been advancing rapidly during the period which is the object of our study. The recent entrance of the powerful and progressive nation of the United States of America upon Imperialism by the annexation of Hawaii and the taking over of the relics of ancient Spanish empire not only adds a new formidable competitor for trade and territory, but changes and complicates the issues. As the focus of political attention and activity shifts more to the Pacific States, and the commercial aspirations of America are more and more set upon trade with the Pacific islands and the Asiatic coast, the same forces which are driving European States along the path of territorial expansion seem likely to act upon the United States, leading her to a virtual abandonment of the principle of American isolation which has hitherto dominated her policy. The following comparative table of colonisation, compiled from the "Statesman's Year-book" for 1900 by Mr. H. C. Morris, marks the present expansion of the political control of Western nations:— Number of Colonies Area. Square Miles. Population. Mother Country. Colonies, &c. Mother Country. Colonies, &c. United Kingdom 50 120,979 11,605,238 40,559,954 345,222,239 France 33 204,092 3,740,756 38,517,975 56,401,860 Germany 13 208,830 1,027,120 52,279,901 14,687,000 Netherlands 3 12,648 782,862 5,074,632 35,115,711 Portugal 9 36,038 801,100 5,049,729 9,148,707 Spain 3 197,670 243,877 17,565,632 136,000 Italy 2 110,646 188,500 31,856,675 850,000 Austria-Hungary 2 241,032 23,570 41,244,811 1,568,092 Denmark 3 15,289 86,634 2,185,335 114,229 Russia 3 8,660,395 255,550 128,932,173 15,684,000 Turkey 4 1,111,741 465,000 23,834,500 14,956,236 China 5 1,336,841 2,881,560 386,000,000 16,680,000 U.S.A. 6 3,557,000 172,091 77,000,000 10,544,617 Total 136 15,813,201 22,273,858 850,103,317 521,108,791 The political nature of the new British Imperialism may be authoritatively ascertained by considering the governmental relations which the newly annexed territories hold with the Crown. Officially, British "colonial possessions" fall into three classes—(1) "Crown colonies, in which the Crown has the entire control of legislation, while the administration is carried on by public officers under the control of the Home Government; (2) colonies possessing representative institutions, but not responsible government, in which the Crown has no more than a veto on legislation, but the Home Government retains the control of public affairs; (3) colonies possessing representative institutions and responsible government, in which the Crown has only a veto on legislation, and the Home Government has no control over any officer except the Governor." Now, of the thirty-nine separate areas which have been annexed by Great Britain since 1870 as colonies or protectorates, not a single one ranks in class 2 or 3. The new Imperialism has established no single British colony endowed with responsible government or representative institutions. Nor, with the exception of the three new States in South Africa, where white settlers live in some numbers, is it seriously pretended that any of these annexed territories is being prepared and educated for representative, responsible self-government; and even in these South African States there is no serious intention, either on the part of the Home Government or of the colonists, that the majority of the inhabitants shall have any real voice in the government. It is true that some of these areas enjoy a measure of self-government, as protectorates or as feudatory States, under their own native princes. But all these in major matters of policy are subject to the absolute rule of the British Government, or of some British official, while the general tendency is towards drawing the reins of arbitrary control more tightly over protectorates, converting them into States which are in substance, though not always in name, Crown colonies. With the exception of a couple of experiments in India, the tendency everywhere has been towards a closer and more drastic imperial control over the territories that have been annexed, transforming protectorates, company rule, and spheres of influence into definite British States of the Crown colony order. This is attributable, not to any greed of tyranny on the part of the Imperial Government, but to the conditions imposed upon our rule by considerations of climate and native population. Almost the whole of this new territory is tropical, or so near to the tropics as to preclude genuine colonisation of British settlers, while in those few districts where Europeans can work and breed, as in parts of South Africa and Egypt, the preoccupation of the country by large native populations of "lower races" precludes any considerable settlement of British workers and the safe bestowal of the full self-government which prevails in Australasia and Canada. The same is true to an even more complete extent of the Imperialism of other continental countries. The new Imperialism has nowhere extended the political and civil liberties of the mother country to any part of the vast territories which, since 1870, have fallen under the government of Western civilised Powers. Politically, the new Imperialism is an expansion of autocracy. Taking the growth of Imperialism as illustrated in the recent expansion of Great Britain and of the chief continental Powers, we find the distinction between Imperialism and colonisation, set forth in the opening chapter, closely borne out by facts and figures, and warranting the following general judgments:— First—Almost the whole of recent imperial expansion is occupied with the political absorption of tropical or sub-tropical lands in which white men will not settle with their families. Second—Nearly all the lands are thickly peopled by "lower races." Thus this recent imperial expansion stands entirely distinct from the colonisation of sparsely peopled lands in temperate zones, where white colonists carry with them the modes of government, the industrial and other arts of the civilisation of the mother country. The "occupation" of these new territories is comprised in the presence of a small minority of white men, officials, traders, and industrial organisers, exercising political and economic sway over great hordes of population regarded as inferior and as incapable of exercising any considerable rights of self-government, in politics or industry.

APPENDIX.

Part I, 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. 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:— Year. Trade (in millions). Value per Head of Population. Year. Trade (in millions). Value per Head of Population. £ s. d. £ s. d. 1870 547 1885 642 1871 615 1886 619 1872 669 1887 643 1873 682 1888 686 1874 668 1889 743 Average 636 19 19 3 Average 666 18 4 5 1875 655 1890 749 1876 632 1891 744 1877 647 1892 715 1878 616 1893 682 1879 612 1894 682 Average 632 18 16 6 Average 715 18 14 10 1880 697 1895 703 1881 694 1896 738 1882 720 1897 745 1883 732 1898 765 1884 686 Average 706 20 1 3 Average 737 19 7 10 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:— Percentages of Total Values. Annual Averages. Imports into Great Britain from Exports from Great Britain to Foreign Countries. British Possessions. Foreign Countries. British Possessions. 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." 1855-1859 76.5 23.5 68.5 31.5 1860-1864 71.2 28.8 66.6 33.4 1865-1869 76.0 24.0 72.4 27.6 1870-1874 78.0 22.0 74.4 25.6 1875-1879 77.9 22.0 66.9 33.1 1880-1884 76.5 23.5 65.5 34.5 1885-1889 77.1 22.9 65.0 35.0 1890-1894 77.1 22.9 67.6 34.4 1895-1898 78.6 21.4 66.0 34.0 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. Trade with Foreign Countries and British Possessions (in Million £) Imports Year. From Foreign Countries. From British Possessions. Percentage from British Possessions. 1891 336 99 23 1892 326 98 23 1893 313 92 23 1894 314 94 23 1895 321 96 23 1896 349 93 21 1897 357 94 21 1898 371 100 22 1899 378 107 22 1900 414 109 21 Trade with Foreign Countries and British Possessions (in Million £) Exports Year. To Foreign Countries. To British Possessions. Percentage to British Possessions. 1,891 216 93 30 1892 211 81 28 1893 198 79 29 1894 195 79 29 1895 210 76 26 1896 206 90 30 1897 207 87 30 1898 204 90 30 1899 235 94 29 1900 252 102 29 Value of new ships sold to foreigners first entered in export returns in 1899—1899, £9,196,000; 1900, £8,588.000. 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." The following table 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:— Four-Yearly Averages. Percentages of Imports into Colonies, &c., from Great Britain Percentages of Exports from Colonies, &c., from Great Britain 1856-1859 46.5 57.1 1860-1863 41.0 65.4 1864-1867 38.9 57.6 1868-1871 39.8 53.5 1872-1875 43.6 54.0 1876-1879 41.7 50.3 1880-1883 42.8 48.1 1884-1887 38.5 43.0 1888-1891 36.3 39.7 1892-1895 32.4 36.6 1896-1899 32.5 34.9 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. Year. Exports and Imports of Great Britain (in Million £) Import and Export Trade of Great Britain with Possessions (in Million £) 1884 686 184 1885 642 170 1886 619 164 1887 643 166 1888 686 179 1889 743 188 1890 749 191 1891 744 193 1892 715 179 1893 682 170 1894 682 172 1895 703 172 1896 738 184 1897 745 183 1898 765 190 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 for the year ending December 1901:— Imports from Exports to Value. Percentage. Value. Percentage. £ £ Foreign Countries 417,615,000 80 178,450,000 63½ British India 38,001,000 7 39,753,000 14 Australasia 34,682,000 7 26,932,000 9½ Canada 19,775,000 4 7,797,000 3 British South Africa 5,155,000 1 17,006,000 6 Other British Possessions 7,082,000 1 10,561,000 4 Total 522,310,000 100 280,499,000 100 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:— Trade of the Empire with Great Britain. (000 omitted in amount columns.) Annual Average of 1867-71. Total Imports. Imports from Britain. Percentage of British Imports. Total Exports. Exports to Britain. Percentage of Exports to Britain. £ £ £ £ India 45,818 31,707 69.2 56,532 29, 738 52.6 Self-governing Colonies 42,612 24,502 57.5 42,386 23,476 55.4 Other Colonies 23,161 7,955 34.3 23,051 10,698 46.4 Annual Average of 1892-96. India 52,577 37,811 71.9 68,250 22,656 33.2 Self-governing Colonies 74,572 44,133 59.2 83, 528 58,714 70.3 Other Colonies 39,835 10,443 26.2 36,626 10,987 29.3 (Professor Flux, "The Flag and Trade," Journal of Statistical Society, Sept. 1899, vol. lxii. pp. 496-98.) 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. Value of Exports of Produce and Manufactures of the United Kingdom to British Colonies and Possessions. (Cape Colony and Natal included under Tropics.) 1884 1885 1886 1887 Tropics 46,006,946 43,420,915 43,565,649 45,649,905 Other Colonies 34,869,842 34,574,005 32,105,752 29,720,351 1888 1889 1890 1891 Tropics. 49,044,638 49,956,824 54,542.324 50,853,312 Other Colonies 35,196,875 33,322,166 32,828,059 35,102,776 1892 1893 1894 1895 Tropics 45,943,912 47,736,754 48,242,074 45,236,549 Other Colonies 28,804,605 24,413,409 24,546,471 24,960,745 1896 1897 1898 Tropics 54,539,233 51,437,539 53,579,233 ... Other Colonies 29,597,704 29,237,524 29,847,538 ... 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. 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.

Part I, Chapter III: Imperialism as an Outlet for Population There is a widely prevalent belief that imperial expansion is desirable, or even necessary, in order to absorb and utilise the surplus of our ever-growing population. "The reproductive powers of nature," runs the argument, "brook no restraint: the most dominant force in history is the tendency of population to overflow its ancient banks, seeking fuller and easier subsistence. Great Britain is one of the most congested areas in the world; her growing population cannot find enough remunerative occupation within these islands; professional and working-classes alike find it more and more difficult to earn a decent and secure living, every labour market is overstocked, emigration is a prime economic necessity. Now; those who under such pressure leave our shores consist largely of the strongest and most energetic stuff the nation contains. Many of these people, whose permanent alienation would be a heavy loss, have been saved to the Empire by the policy of imperial expansion: they have settled either in vacant places of the earth which they have seized and kept under British rule, or in places where they have set up a definitely British supremacy over lower races of existing inhabitants. It is our most urgent national interest that this surplus emigrant population shall settle in lands which are under the British flag, and we must therefore maintain a constant policy of extending the political control of Great Britain so as to cover the new homes to which these people betake themselves in pursuit of employment." This motive is closely linked with other economic motives relating to trade and investments. The establishment of British trade, and especially of British capital, in foreign lands naturally attracts a certain British population; traders, engineers, overseers, and mechanics are needed as entrepreneurs and managers. So wherever a new area is opened up to our trade and capital the nucleus of an outlander population is formed. Hence, of necessity, springs up a crop of political issues, an outlander problem: the British outlanders not satisfied with the foreign rule demand the intervention of their home Government. Thus the duty of protecting British subjects in a foreign country is identified with the duty of protecting British property, not merely the personal property of the outlanders, often a trivial matter, but the far larger stakes of the home investors. But apart from these cases of special interest, wherever any considerable number of British subjects settles in a savage or semi-civilised country they have a "right" to British protection, and since that protection can seldom be made effective without the exercise of direct British authority, the imperial ægis of Great Britain must be spread over all such areas, when a convenient occasion for such expansion presents itself. Such is the accepted theory and practice. What validity does it possess as an argument for recent imperial expansion? Let me first ask: Is England over-populated now, and is the prospect of further increase such as to compel us to "peg out claims for posterity" in other parts of the world? The facts are these. Great Britain is not so thickly populated as certain prosperous industrial areas in Germany, the Netherlands, and China: along with every recent growth of population has come a far greater growth of wealth and of the power to purchase food and other subsistence. The modern specialisation of industry has caused a congestion of population upon certain spots which may be injurious in some ways to the well-being of the nation, but it cannot be regarded as over-population in the sense of a people outgrowing the means of subsistence. Nor have we reason to fear such over-population in the future. It is true that our manufactures and commerce may not continue to grow as rapidly as in the past, though we have no clear warrant from industrial statistics for this judgment: but if this be so, neither is our population likely to increase so fast. Of this we have clear statistical evidence: the diminution of the rate of growth of our population, as disclosed by the two latest censuses, is such as to justify the conclusion that, if the same forces continue to operate, the population of Great Britain will be stationary by the middle of the century. There exists, then, no general necessity for a policy of expansion in order to provide for over-population, present or prospective. But supposing it were necessary for an increasing surplus of our population to emigrate, is it necessary for us to spend so large a part of our national resources, and to incur such heavy risks, in seizing new territory for them to settle upon? The total emigration of Britons represents no large proportion of the population; that proportion during the recent years of imperial expansion has perceptibly diminished: of the emigrants a small proportion settles in British possessions, and an infinitesimally small fraction settles in the countries acquired under the new Imperialism. These most instructive facts are established by the following official table, giving the statistics of emigration from 1884, the year from which the full tide of imperial expansion is to be dated:— Number of Outward-Bound Passengers of British and Irish Origin, from the United Kingdom to Countries of Europe Year. Passengers to Total. United States. British North America. Australia and New Zealand. Cape of Good Hope and Natal. Other Places 1884 155,280 31,134 44,255 ... 11,510 242,179 1885 137,687 19,828 39,395 ... 10,724 207,644 1886 152,710 24,745 43,076 3,897 8,472 232,900 1887 201,526 32,025 34,183 4,909 8,844 281,487 1888 195,986 34,853 31,127 6,466 11,496 279,928 1889 168,771 28,269 28,294 13,884 14,577 253,795 1890 152,413 22,520 21,179 10,321 11,683 218,116 1891 156,395 21,578 19,547 9,090 11,897 218,507 1892 150,039 23,254 15,950 9,891 10,908 210,042 1893 148,949 24,732 11,203 13,097 10,833 208,814 1894 104,001 17,459 10,917 13,177 10,476 156,030 1895 126,502 16,622 10,567 20,234 11,256 185,181 1896 98,921 15,267 10,354 24,594 12,789 161,925 1897 85,324 15,571 12,061 21,109 12,395 146,460 1898 80,494 17,640 10,693 19,756 12,061 140,644 1899 92,482 16,410 11,467 14,432 11,571 146,362 1900 102,797 18,443 14,922 20,815 11,848 168,825 Regarded as a measure of the outflow of "surplus" population, even these figures are excessive in two ways. In the first place, they include considerable numbers of travellers and casual visitors who are not real emigrants. Secondly, to measure aright the net emigration, we must set against these figures the immigration figures. The net reduction of our population by emigration is thus reduced to an average, during the last five years, of 87,224 per annum. Considering that the term "other places" includes the entire non-European world, outside Canada, Australasia, and South Africa, it is clear that the rest of our Empire absorbs at most a very few thousands, while the number of industrial settlers in our new tropical dominions must be a mere handful. A certain quantity of military and official employment is afforded by the new Imperialism to the influential upper classes, a few engineers, missionaries, prospectors, and overseers of trading and industrial undertakings get temporary posts, but as a contribution towards the general field of employment the new Imperialism is an utterly insignificant factor. No substantial settlement of Britons is taking place upon any of the areas of the Empire acquired since 1870, excepting the Transvaal and the Orange River Colony, nor is it likely that any such settlement will take place. The tropical character of most lands acquired under the new Imperialism renders genuine colonisation impossible: there is no true British settlement in these places; a small number of men spend a short broken period in precarious occupations as traders, engineers, missionaries, overseers. The new Empire is even more barren for settlement than for profitable trade.

Part I, Chapter IV: Economic Parasites of Imperialism I Seeing that the Imperialism of the last three decades is clearly condemned as a business policy, in that at enormous expense it has procured a small, bad, unsafe increase of markets, and has jeopardised the entire wealth of the nation in rousing the strong resentment of other nations, we may ask, "How is the British nation induced to embark upon such unsound business?" The only possible answer is that the business interests of the nation as a whole are subordinated to those of certain sectional interests that usurp control of the national resources and use them for their private gain. This is no strange or monstrous charge to bring; it is the commonest disease of all forms of government. The famous words of Sir Thomas More are as true now as when he wrote them: "Everywhere do I perceive a certain conspiracy of rich men seeking their own advantage under the name and pretext of the commonwealth." Although the new Imperialism has been bad business for the nation, it has been good business for certain classes and certain trades within the nation. The vast expenditure on armaments, the costly wars, the grave risks and embarrassments of foreign policy, the stoppage of political and social reforms within Great Britain, though fraught with great injury to the nation, have served well the present business interests of certain industries and professions. It is idle to meddle with politics unless we clearly recognise this central fact and understand what these sectional interests are which are the enemies of national safety and the commonwealth. We must put aside the merely sentimental diagnosis which explains wars or other national blunders by outbursts of patriotic animosity or errors of statecraft. Doubtless at every outbreak of war not only the man in the street but the man at the helm is often duped by the cunning with which aggressive motives and greedy purposes dress themselves in defensive clothing. There is, it may be safely asserted, no war within memory, however nakedly aggressive it may seem to the dispassionate historian, which has not been presented to the people who were called upon to fight as a necessary defensive policy, in which the honour, perhaps the very existence, of the State was involved. The disastrous folly of these wars, the material and moral damage inflicted even on the victor, appear so plain to the disinterested spectator that he is apt to despair of any State attaining years of discretion, and inclines to regard these natural cataclysms as implying some ultimate irrationalism in politics. But careful analysis of the existing relations between business and politics shows that the aggressive Imperialism which we seek to understand is not in the main the product of blind passions of races or of the mixed folly and ambition of politicians. It is far more rational than at first sight appears. Irrational from the standpoint of the whole nation, it is rational enough from the standpoint of certain classes in the nation. A completely socialist State which kept good books and presented regular balance-sheets of expenditure and assets would soon discard Imperialism; an intelligent laissez-faire democracy which gave duly proportionate weight in its policy to all economic interests alike would do the same. But a State in which certain well-organised business interests are able to outweigh the weak, diffused interest of the community is bound to pursue a policy which accords with the pressure of the former interests. In order to explain Imperialism on this hypothesis we have to answer two questions. Do we find in Great Britain to-day any well-organised group of special commercial and social interests which stand to gain by aggressive Imperialism and the militarism it involves? If such a combination of interests exists, has it the power to work its will in the arena of politics? What is the direct economic outcome of Imperialism? A great expenditure of public money upon ships, guns, military and naval equipment and stores, growing and productive of enormous profits when a war, or an alarm of war, occurs; new public loans and important fluctuations in the home and foreign Bourses; more posts for soldiers and sailors and in the diplomatic and consular services; improvement of foreign investments by the substitution of the British flag for a foreign flag; acquisition of markets for certain classes of exports, and some protection and assistance for trades representing British houses in these manufactures; employment for engineers, missionaries, speculative miners, ranchers and other emigrants. Certain definite business and professional interests feeding upon imperialistic expenditure, or upon the results of that expenditure, are thus set up in opposition to the common good, and, instinctively feeling their way to one another, are found united in strong sympathy to support every new imperialist exploit. If the £60,000,000 which may now be taken as a minimum expenditure on armaments in time of peace were subjected to a close analysis, most of it would be traced directly to the tills of certain big firms engaged in building warships and transports, equipping and coaling them, manufacturing guns, rifles, and ammunition, supplying horses, waggons, saddlery, food, clothing for the services, contracting for barracks, and for other large irregular needs. Through these main channels the millions flow to feed many subsidiary trades, most of which are quite aware that they are engaged in executing contracts for the services. Here we have an important nucleus of commercial Imperialism. Some of these trades, especially the shipbuilding, boiler-making, and gun and ammunition making trades, are conducted by large firms with immense capital, whose heads are well aware of the uses of political influence for trade purposes. These men are Imperialists by conviction; a pitiful policy is good for them. With them stand the great manufacturers for export trade, who gain a living by supplying the real or artificial wants of the new countries we annex or open up. Manchester, Sheffield, Birmingham, to name three representative cases, are full of firms which compete in pushing textiles and hardware, engines, tools, machinery, spirits, guns, upon new markets. The public debts which ripen in our colonies, and in foreign countries that come under our protectorate or influence, are largely loaned in the shape of rails, engines, guns, and other materials of civilisation made and sent out by British firms. The making of railways, canals, and other public works, the establishment of factories, the development of mines, the improvement of agriculture in new countries, stimulate a definite interest in important manufacturing industries which feeds a very firm imperialist faith in their owners. The proportion which such trade bears to the total industry of Great Britain is very small, but some of it is extremely influential and able to make a definite impression upon politics, through chambers of commerce, Parliamentary representatives, and semi-political, semi-commercial bodies like the Imperial South African Association or the China League. The shipping trade has a very definite interest which makes for Imperialism. This is well illustrated by the policy of State subsidies now claimed by shipping firms as a retainer, and in order to encourage British shipping for purposes of imperial safety and defence. The services are, of course, imperialist by conviction and by professional interest, and every increase of the army and navy enhances their numerical strength and the political power they exert. The abolition of purchase in the army, by opening the profession to the upper middle classes, greatly enlarged this most direct feeder of imperial sentiment. The potency of this factor is, of course, largely due to the itch for glory and adventure among military officers upon disturbed or uncertain frontiers of the Empire. This has been a most prolific source of expansion in India. The direct professional influence of the services carries with it a less organised but powerful sympathetic support on the part of the aristocracy and the wealthy classes, who seek in the services careers for their sons. To the military services we may add the Indian Civil Service and the numerous official and semi-official posts in our colonies and protectorates. Every expansion of the Empire is also regarded by these same classes as affording new openings for their sons as ranchers, planters, engineers, or missionaries. This point of view is aptly summarised by a high Indian official, Sir Charles Crossthwaite, in discussing British relations with Siam. "The real question was who was to get the trade with them, and how we could make the most of them, so as to find fresh markets for our goods and also employment for those superfluous articles of the present day, our boys." From this standpoint our colonies still remain what James Mill cynically described them as being, "a vast system of outdoor relief for the upper classes." In all the professions, military and civil, the army, diplomacy, the church, the bar, teaching and engineering, Greater Britain serves for an overflow, relieving the congestion of the home market and offering chances to more reckless or adventurous members, while it furnishes a convenient limbo for damaged characters and careers. The actual amount of profitable employment thus furnished by our recent acquisitions is inconsiderable, but it arouses that disproportionate interest which always attaches to the margin of employment. To extend this margin is a powerful motive in Imperialism. These influences, primarily economic, though not unmixed with other sentimental motives, are particularly operative in military, clerical, academic, and Civil Service circles, and furnish an interested bias towards Imperialism throughout the educated classes. II By far the most important economic factor in Imperialism is the influence relating to investments. The growing cosmopolitanism of capital is the greatest economic change of this generation. Every advanced industrial nation is tending to place a larger share of its capital outside the limits of its own political area, in foreign countries, or in colonies, and to draw a growing income from this source. No exact or even approximate estimate of the total amount of the income of the British nation derived from foreign investments is possible. We possess, however, in the income-tax assessments an indirect measurement of certain large sections of investments, from which we can form some judgment as to the total size of the income from foreign and colonial sources, and the rate of its growth. Income from Foreign Investments Assured to Income-Tax. 1884. 1888. 1892. 1896. 1900. £ £ £ £ £ From Indian public revenue 2,607,942 3,130,959 3,203,573 3,475,751 3,587,919 Indian rails 4,544,466 4,841,647 4,580,797 4,543,969 4,693,795 Colonial and foreign public securities, &c. 13,233,271 16,757,736 14,949,017 16,419,933 18,394,380 Railways out of United Kingdom 3,777,592 4,178,456 8,013,838 13,032,556 14,043,107 Foreign and colonial investments 9,665,853 18,069,573 23,981,5451 17,428,870 19,547,685 33,829,124 146,978,371 54,728,770 54,901,079 60,266,886 From this table it appears that the period of energetic Imperialism has been coincident with a remarkable growth in the income from external investments. The income from these sources has nearly doubled in the period 1884-1900, while the portion derived from foreign railways and foreign and colonial investments has increased at a still more rapid rate. These figures only give the foreign income which can be identified as such. To them must be added a large amount of income which escapes these income-tax returns, including considerable sums which would appear as profits of businesses carried on in the United Kingdom, such as insurance companies, investment trusts, and land mortgage companies, many of which derive a large part of their income from foreign investments. How rapid is the growth of this order of investment is seen from the published returns of investments of life insurance companies, which show that their investments in mortgages outside the United Kingdom had grown from about £6,000,000 in 1890 to £13,000,000 in 1898. Sir R. Giffen estimated the income derived from foreign sources as profit, interest and pensions in 1882 at £70,000,000, and in a paper read before the Statistical Society in March 1899 he estimated the income from these same sources for the current year at £90,000,000. It is probable that this last figure is an underestimate, for if the items of foreign income not included as such under the income-tax returns bear the same proportion to those included as in 1882, the present total of income from foreign and colonial investments should be £120,000,000 rather than £90,000,000. Sir R. Giffen hazards the calculation that the new public investments abroad in the sixteen years 1882-1898 amounted to over £800,000,000, "and though part of the sum may have been nominal only, the real investment must have been enormous." Mr. Mulhall gives the following estimate of the size and growth of our foreign and colonial investments since 1862: Year. Amount. Annual Increase. £ Per Cent. 1862 144,000,000 ... 1872 600,000,000 45.6 1882 875,000,000 27.5 1893 1,698,000,000 74.8 This last amount is of especial interest, because it represents the most thorough investigation made by a most competent economist for the "Dictionary of Political Economy." The investments included under this figure may be classified under the following general heads: Loans. Million £. Railways. Million £. Sundries. Million £. Foreign 525 U.S.A. 120 Banks 50 Colonial 225 Colonial 140 Lands 100 Municipal 20 Various 128 Mines, &c. 390 770 388 540 In other words, in 1893 the British capital invested abroad represented about 15 per cent. of the total wealth of the United Kingdom: nearly one-half of this capital was in the form of loans to foreign and colonial Governments; of the rest a large proportion was invested in railways, banks, telegraphs, and other public services, owned, controlled, or vitally affected by Governments, while most of the remainder was placed in lands and mines, or in industries directly dependent on land values. Income-tax returns and other statistics descriptive of the growth of these investments indicate that the total amount of British investments abroad at the end of the nineteenth century cannot be set down at a lower figure than £2,000,000,000. Considering that Sir R. Giffen regarded as "moderate'" the estimate of £1,700,000,000 in 1892, the figure here named is probably below the truth. Now, without placing any undue reliance upon these estimates, we cannot fail to recognise that in dealing with these foreign investments we are facing by far the most important factor in the economics of Imperialism. Whatever figures we take, two facts are evident. First, that the income derived as interest upon foreign investments enormously exceeds that derived as profits upon ordinary export and import trade. Secondly, that while our foreign and colonial trade, and presumably the income from it, are growing but slowly, the share of our import values representing income from foreign investments is growing very rapidly. In a former chapter I pointed out how small a proportion of our national income appeared to be derived as profits from external trade. It seemed unintelligible that the enormous costs and risks of the new Imperialism should be undertaken for such small results in the shape of increase to external trade, especially when the size and character of the new markets acquired were taken into consideration. The statistics of foreign investments, however, shed clear light upon the economic forces which are dominating our policy. While the manufacturing and trading classes make little out of their new markets, paying, if they knew it, much more in taxation than they get out of them in trade, it is quite otherwise with the investor. It is not too much to say that the modern foreign policy of Great Britain is primarily a struggle for profitable markets of investment. To a larger extent every year Great Britain is becoming a nation living upon tribute from abroad, and the classes who enjoy this tribute have an ever-increasing incentive to employ the public policy, the public purse, and the public force to extend the field of their private investments, and to safeguard and improve their existing investments. This is, perhaps, the most important fact in modern politics, and the obscurity in which it is wrapped constitutes the gravest danger to our State. What is true of Great Britain is true likewise of France, Germany, the United States, and of all countries in which modern capitalism has placed large surplus savings in the hands of a plutocracy or of a thrifty middle class. A well-recognised distinction is drawn between creditor and debtor countries. Great Britain has been for some time by far the largest creditor country, and the policy by which the investing classes use the instrument of the State for private business purposes is most richly illustrated in the recent history of her wars and annexations. But France, Germany, and the United States are advancing fast along the same path. The nature of these imperialist operations is thus set forth by the Italian economist Loria:— "When a country which has contracted a debt is unable, on account of the slenderness of its income, to offer sufficient guarantee for the punctual payment of interest, what happens? Sometimes an out-and-out conquest of the debtor country follows. Thus France's attempted conquest of Mexico during the second empire was undertaken solely with the view of guaranteeing the interest of French citizens holding Mexican securities. But more frequently the insufficient guarantee of an international loan gives rise to the appointment of a financial commission by the creditor countries in order to protect their rights and guard the fate of their invested capital. The appointment of such a commission literally amounts in the end, however, to a veritable conquest. We have examples of this in Egypt, which has to all practical purposes become a British province, and in Tunis, which has in like manner become a dependency of France, who supplied the greater part of the loan. The Egyptian revolt against the foreign domination issuing from the debt came to nothing, as it met with invariable opposition from capitalistic combinations, and Tel-el-Kebir's success, bought with money, was the most brilliant victory wealth has ever obtained on the field of battle." But, though useful to explain certain economic facts, the terms "creditor" and "debtor," as applied to countries, obscure the most significant feature of this Imperialism. For though, as appears from the analysis given above, much, if not most, of the debts are "public," the credit is nearly always private, though sometimes, as in the case of Egypt, its owners succeed in getting their Government to enter a most unprofitable partnership, guaranteeing the payment of the interest, but not sharing in it. Aggressive Imperialism, which costs the tax-payer so dear, which is of so little value to the manufacturer and trader, which is fraught with such grave incalculable peril to the citizen, is a source of great gain to the investor who cannot find at home the profitable use he seeks for his capital, and insists that his Government should help him to profitable and secure investments abroad. If, contemplating the enormous expenditure on armaments, the ruinous wars, the diplomatic audacity of knavery by which modern Governments seek to extend their territorial power, we put the plain, practical question, Cui bono? the first and most obvious answer is, The investor. The annual income Great Britain derives from commissions on her whole foreign and colonial trade, import and export, is estimated by Sir R. Giffen at £18,000,000 for 1899, taken at 2½ per cent., upon a turnover of £800,000,000. This is the whole that we are entitled to regard as profits on external trade. Considerable as this sum is, it cannot serve to yield an economic motive-power adequate to explain the dominance which business considerations exercise over our imperial policy. Only when we set beside it some £90,000,000 or £100,000,000 representing pure profit upon investments, do we understand whence the economic impulse to Imperialism is derived. Investors who have put their money in foreign lands, upon terms which take full account of risks connected with the political conditions of the country, desire to use the resources of their Government to minimise these risks, and so to enhance the capital value and the interest of their private investments. The investing and speculative classes in general also desire that Great Britain should take other foreign areas under her flag in order to secure new areas for profitable investment and speculation. III If the special interest of the investor is liable to clash with the public interest and to induce a wrecking policy, still more dangerous is the special interest of the financier, the general dealer in investments. In large measure the rank and the of the investors are, both for business and for politics, the cat's-paws of the great financial houses, who use stocks and shares not so much as investments to yield them interest, but as material for speculation in the money market. In handling large masses of stocks and shares, in floating companies, in manipulating fluctuations of values, the magnates of the Bourse find their gain. These great businesses—banking, broking, bill discounting, loan floating, company promoting—form the central ganglion of international capitalism. United by the strongest bonds of organisation, always in closest and quickest touch with one another, situated in the very heart of the business capital of every State, controlled, so far as Europe is concerned, chiefly by men of a single and peculiar race, who have behind them many centuries of financial experience, they are in a unique position to control the policy of nations. No great quick direction of capital is possible save by their consent and through their agency. Does any one seriously suppose that a great war could be undertaken by any European State, or a great State loan subscribed, if the house of Rothschild and its connections set their face against it? Every great political act involving a new flow of capital, or a large fluctuation in the values of existing investments, must receive the sanction and the practical aid of this little group of financial kings. These men, holding their realised wealth and their business capital, as they must, chiefly in stocks and bonds, have a double stake, first as investors, but secondly and chiefly as financial dealers. As investors, their political influence does not differ essentially from that of the smaller investors, except that they usually possess a practical control of the businesses in which they invest. As speculators or financial dealers they constitute, however, the gravest single factor in the economics of Imperialism. To create new public debts, to float new companies, and to cause constant considerable fluctuations of values are three conditions of their profitable business. Each condition carries them into politics, and throws them on the side of Imperialism. The public financial arrangements for the Philippine war put several millions of dollars into the pockets of Mr. Pierpont Morgan and his friends; the China-Japan war, which saddled the Celestial Empire for the first time with a public debt, and the indemnity which she will pay to her European invaders in connection with the recent conflict, bring grist to the financial mills in Europe; every railway or mining concession wrung from some reluctant foreign potentate means profitable business in raising capital and floating companies. A policy which rouses fears of aggression in Asiatic states, and which fans the rivalry of commercial nations in Europe, evokes vast expenditure on armaments, and ever-accumulating public debts, while the doubts and risks accruing from this policy promote that constant oscillation of values of securities which is so profitable to the skilled financier. There is not a war, a revolution, an anarchist assassination, or any other public shock, which is not gainful to these men; they are harpies who suck their gains from every new forced expenditure and every sudden disturbance of public credit. To the financiers "in the know" the Jameson raid was a most advantageous coup, as may be ascertained by a comparison of the "holdings" of these men before and after that event; the terrible sufferings of England and South Africa in the war, which is a sequel of the raid, is a source of immense profit to the big financiers who have best held out against the uncalculated waste, and have recouped themselves by profitable war contracts and by "freezing out" the smaller interests in the Transvaal. These men are the only certain gainers from the war, and most of their gains are made out of the public losses of their adopted country or the private losses of their fellow-countrymen. The policy of these men, it is true, does not necessarily make for war; where war would bring about too great and too permanent a damage to the substantial fabric of industry, which is the ultimate and essential basis of speculation, their influence is cast for peace, as in the dangerous quarrel between Great Britain and the United States regarding Venezuela. But every increase of public expenditure, every oscillation of public credit short of this collapse, every risky enterprise in which public resources can be made the pledge of private speculations, is profitable to the big money-lender and speculator. The wealth of these houses, the scale of their operations, and their cosmopolitan organisation make them the prime determinants of imperial policy. They have the largest definite stake in the business of Imperialism, and the amplest means of forcing their will upon the policy of nations. In view of the part which the non-economic factors of patriotism, adventure, military enterprise, political ambition, and philanthropy play in imperial expansion, it may appear that to impute to financiers so much power is to take a too narrowly economic view of history. And it is true that the motor-power of Imperialism is not chiefly financial: finance is rather the governor of the imperial engine, directing the energy and determining its work: it does not constitute the fuel of the engine, nor does it directly generate the power. Finance manipulates the patriotic forces which politicians, soldiers, philanthropists, and traders generate; the enthusiasm for expansion which issues from these sources, though strong and genuine, is irregular and blind; the financial interest has those qualities of concentration and clear-sighted calculation which are needed to set Imperialism to work. An ambitious statesman, a frontier soldier, an overzealous missionary, a pushing trader, may suggest or even initiate a step of imperial expansion, may assist in educating patriotic public opinion to the urgent need of some fresh advance, but the final determination rests with the financial power. The direct influence exercised by great financial houses in "high politics" is supported by the control which they exercise over the body of public opinion through the Press, which, in every "civilised" country, is becoming more and more their obedient instrument. While the specifically financial newspaper imposes "facts" and "opinions" on the business classes, the general body of the Press comes more and more under the conscious or unconscious domination of financiers. The case of the South African Press, whose agents and correspondents fanned the martial flames in this country, was one of open ownership on the part of South African financiers, and this policy of owning newspapers for the sake of manufacturing public opinion is common in the great European cities. In Berlin, Vienna, and Paris many of the influential newspapers are held by financial houses, which use them, not primarily to make direct profits out of them, but in order to put into the public mind beliefs and sentiments which will influence public policy and thus affect the money market. In Great Britain this policy has not gone so far, but the alliance with finance grows closer every year, either by financiers purchasing a controlling share of newspapers, or by newspaper proprietors being tempted into finance. Apart from the financial Press, and financial ownership of the general Press, the City notoriously exercises a subtle and abiding influence upon leading London newspapers, and through them upon the body of the provincial Press, while the entire dependence of the Press for its business profits upon its advertising columns involves a peculiar reluctance to oppose the organised financial classes with whom rests the control of so much advertising business. Add to this the natural sympathy with a sensational policy which a cheap Press always manifests, and it becomes evident that the Press is strongly biassed towards Imperialism, and lends itself with great facility to the suggestion of financial or political Imperialists who desire to work up patriotism for some new piece of expansion. Such is the array of distinctively economic forces making for Imperialism, a large loose group of trades and professions seeking profitable business and lucrative employment from the expansion of military and civil services, from the expenditure on military operations, the opening up of new tracts of territory and trade with the same, and the provision of new capital which these operations require, all these finding their central guiding and directing force in the power of the general financier. The play of these forces does not openly appear. They are essentially parasites upon patriotism, and they adapt themselves to its protecting colours. In the mouths of their representatives are noble phrase, expressive of their desire to extend the area of civilisation, to establish good government, promote Christianity, extirpate slavery, and elevate the lower races. Some of the business men who hold such language may entertain a genuine, though usually a vague, desire to accomplish these ends, but they are primarily engaged in business, and they are not unaware of the utility of the more unselfish forces in furthering their ends. Their true attitude of mind is expressed by Mr. Rhodes in his famous description of "Her Majesty's Flag" as "the greatest commercial asset in the world."

Part I, Chapter V: Imperialism Based on Protection A business man estimating the value of an extension of his business will set the increased costs against the increased takings. Is it unreasonable that a business nation should adopt the same course? From this standpoint our increased military and naval expenditure during recent years may be regarded primarily as insurance premiums for protection of existing colonial markets and current outlay on new markets. In order to test the finance of the new Imperialism, let us compare the growth of expenditure on armaments and wars since 1884 with the increased value of colonial trade:— Year. Armaments and War. Colonial Trade. Import and Export Trade with Possessions. £ £ 1884 27,864,000 184,000,000 1885 30,577,000 170,000,000 1886 39,538,000 164,000,000 1887 31,768,000 166,000,000 1888 30,609,000 179,000,000 1889 30,536,000 188,000,000 1890 32,772,000 197,000,000 1891 33,488,000 193,000,000 1892 33,312,000 179,000,000 1893 33,423,000 170,000,000 1894 33,566,000 172,000,000 1895 35,593,000 172,000,000 1896 38,334,000 184,000,000 1897 41,453,000 183,000,000 1898 40,395,000 190,000,000 Now, though there are no means of ear-marking the expenditure which might rank as insurance upon old markets or that which is spent 