2d. Upon whom is the incidence of duties levied upon fish exported by Canada into the United States, the producer or the consumer?

I again (if I may do so without giving offense to my learned friends on the other side) express my obligations to Mr. Miall for the valuable assistance he has afforded in preparing ny argument on these points. Article XXI of the Treaty of Washington is as follows:

It is agreed that for the term of years mentioned in Article XXXIII of this treaty, fish and fish-oil of all kinds (except fish of the inland lakes and of the rivers falling into them, and except fish preserved in oil), being the products of the fisheries of the United States or of the Dominion of Canada, or of Prince Edward Island, shall be admitted into each country respectively free of duty.

ARTICLE XXII.-Inasmuch as it is asserted by the Government of Her Britannic Majesty that the privileges accorded to the citizens of the United States under Article XVIII of this treaty are of greater value than those accorded by Articles XIX and XXI of this treaty to the subjects of Her Britannic Majesty, and this assertion is not admitted by the Government of the United States, it is further agreed that Commissioners shall be appointed to determine, having regard to the privileges accorded by the United States to the subjects of Her Britannic Majesty, as stated in Articles XIX and XXI of this treaty the amount of any compensation which, in their opinion, ought to be paid by the Government of the United States to the Government of Her Britannic Majesty in return for the privileges accorded to the citizens of the United States under Article XVIII of this treaty; and that any sum of money which the said Commissioners may so award shall be paid by the United States Government in a gross sum within twelve months after such award shall have been given. The advantages which might be expected to flow from the reciprocal freedom of markets, provided for by Article XXI, might be of two kinds

1. Increased trade.

2. Increased profits upon the volume of trade already existing. The latter, however, could only obtain upon the supposition that the daties previously levied had been a burden upon the foreign producer. In reference to the first of these questions it is contended

1st. That the increase of consumption in the United States of Britishcaught fish has not been equal to the increase of consumption in Canada of the products of the United States fisheries.

2d. That a considerable portion of the products of British-American fisheries, exported to the United States for many years past, has been re-exported to foreign countries, where they have entered into competition with other foreign exports of Her Majesty's British-American subjects; and it must be borne in mind that these fish have not paid any duty.

These propositions will be dealt with seriatim.

By reference to statement No. 8, to be found on page 435 of the British Evidence, it will be found that for the seven years following the abrogation of the Reciprocity Treaty (when duties were payable upon importations) the imports of fish and fish-oil from the United States into the Dominion of Canada and Prince Edward Island were as follows:

the average annual value being $152,506.

During the years 1874, 1875, 1876, 1877, when no duties were payable, they have, under the operation of the treaty, been as follows:

1874.

$728, 921

1875.

727,587

1876.

679,657

1877.

750, 382

the annual average having been increased to $721,637.

The increase, therefore, of the United States exportations of fish and fish-oil annually to Canada has been $569,131, of which $179,030 consisted of fresh fish, leaving $390,101 as the increase upon articles. previously subjected to duty. As against this gain to the United States the British producers have gained an increased market in the United States of only $340,589, as will be seen by the following figures to be found in the same statement.

During the seven years immediately preceding the Washington Treaty, when duties were payable, the United States imported the fish products of Canada and Prince Edward Island as follows, viz:

the annual average being $1,137,839.

933, 041

1,393, 389

Since the treaty has been in full operation the annual average has increased to $1,505,888, the imports having been as follows:

the increase in the annual average being $368,049, of which increase $27,460 was due to fresh fish, leaving $340,589 as the increase upon articles previously subjected to duty. From these figures it is clear, then, that as respects the advantages arising from an increased market the United States and not Canada has been the greatest gainer. It may be remarked, before leaving this part of the subject, that although the sta tistics put in by the Government of the United States, as to the total imports into the United States from Canada, approximate very closely to those put in by Her Majesty's Government in respect of the exports from Canada to the United States, there is an important discrepancy between the exports from the United States to Canada as put in evidence in Table XIV of Appendix O, and the imports into Canada from the United States as put in evidence by her Majesty's Government.

This has already been referred to during the course of the evidence, but the attention of the Commissioners is now again directed to the explicit admissions of Mr. Young, the Chief of the Bureau of Statistics at Washington, in his reports of 1874, 75, and '76. With regard to this subject, for example, he says, at page XV of his report for 1876: "During the year ended 30th June, 1876, the total value of domestic merchandise and produce exported to Canada, and which was omitted in the returns of the United States custom officers on the Canadian border, as appears from the official statements furnished by the Commissioner of Customs of the Dominion, amounted to $10,507,563, as against $15,596,524 in the preceding year, and $11,424,566 in 1874."

2. I beg now to call the attention of your excellency and your honors to the fact that a considerable proportion of the products of the BritishAmerican fisheries, exported to the United States for many years past, has been re-exported to other foreign countries, where they may be fairly presumed to have entered into competition with the direct foreign exports of Her Majesty's British-American subjects.

This will clearly appear by a reference to statement No. 11, to be found on page 437 of the British Evidence, which shows that the exports of dried and smoked, pickled and other cured fish (exclusive of Cali

fornia) to all other foreign countries, from 1850 to 1876, averaged annually (at a gold valuation) as follows, viz:

1850 to 1854..............
1860 to 1866..

1866 to 1873..

1873 to 1876..

$755, 165, Non-reciprocal years.
1, 001, 984, Reciprocal years.
.1, 196, 554, Non-reciprocal years.
.1, 640, 426, Reciprocal years.

Now, comparing these exports from the United States to all foreign countries with the imports from Canada into the United States, it would appear that they are largely interdependent. The imports referred to are as follows:

1850 to 1854.

1856 to 1866.
1866 to 1873..

1873 to 1877 .

$792, 419 1,377, 727 1, 137, 839 1,505, 888

With regard to this matter, I call attention to the following assertion made at page 9 of the "Answer" of the United States, viz: "But while the result (of the Washington Treaty) to them (Canadians) has been one of steady development and increasing wealth, the United States cod fishery even has declined in amount and value." If, then, the domestic production of the United States has decreased, and the exports to foreign countries have increased in about the same ratio as have the im portations from Canada, is it not evident that the increased imports have been made mainly with a view to the supply of foreign markets, or what is equivalent, to supply the hiatus in the markets of the United States due to the exportation of a greater quantity of their own fish products than the yield of their fisheries warranted in view of their own requirements for home consumption? It would seem from an examination of the statistics that the increased importations from Canada during those years in which no duties were levied on Canadian fish were largely due to an increased foreign trade, and it is contended that Her Majesty's subjects gained no substantial pecuniary advantage from supplying those foreign markets by indirect rather than direct trade. On the other hand, the tendency of this class of trade is to throw the foreign carrying trade hitherto conducted by subjects of Her Majesty more and more into the hands of the ship-owners and brokers of the United States.

A close examination of Canadian exports confirms this view. Of the entire exports, those to the United States and to other foreign countries compare as follows:

If any further reasoning is required in support of this very evident contention, the following extract from page 529 of the United States Census Report for 1860 may be useful: "By the warehousing act of 1846, foreign fish were allowed to be imported and entered in bond, and thence exported without payment of duty; but under the reciprocity act colonial fish are admitted free of duty. These acts have caused our principal fish-distributing cities, such as Boston, New York, and Philadelphia, to become exporters of large quantities of foreign fish."

Although, therefore, the export trade of Canada has progressively increased from year to year, it is plain that the removal of fiscal obstructions on the part of the United States has had the effect, more or less, of turning a certain proportion of our foreign trade, with other foreign countries, into American channels. In other words, a larger proportion of the West Indian and South American fish trade of Canada has been done through United States merchants, whenever tariff restrictions have been removed.

Now, the able counsel and Agent of the United States has chosen, as the basis upon which to determine the question of remissions of duty, the year 1874.

It is contended that it would be manifestly unfair to take as a basis upon which to estimate such remissions, those years during which it is alleged the exportations from Canada to the United States have (mainly in consequence of such remissions) considerably increased.

The United States imports from Canada and Prince Edward Island of fish and fish-oil from 1867 to 1873, during which period duties were imposed upon such importations, were as follows:

1867.

1868.

1869

1870.

1871.

1872.

1873...

$1, 108, 779
1, 103, 859
1,208, 805

1, 129, 665
1,087, 341

933, 041

1, 393, 389 The average annual value of the above-mentioned importation was $1,137,840, and the largest in any one year, $1,393,389, in 1873. The commerce and navigation returns of the United States give the importation from Canada in that year at $1,400,562; or, including Newfoundland, at $1,685,489, as follows:

Now, by reference to the United States Commerce and Navigation Returns for 1873 (page 311) it will be seen that the re-exports of foreign fish were as follows:

This sum, therefore, representing duties which never were collected, must be deducted from the aggregate duties accrued, as shown by the figures just previously given, viz:

$321, 935

Deduct

in regard to which it remains to be decided whether or not its remission has inured to the benefit of the Canadian producer.

The United States contend, at page 31 of the Answer, that the remis sion of duties to Canadian fishermen during the four years which have already elapsed under the operation of the treaty has amounted to about $400,000 annually, which proposition it was explicitely stated would be conclusively proved in evidence which would be laid before the Commission. This extraordinary assertion which, it has been contended, has been contravened by the whole tenor of the evidence, whether adduced on behalf of the United States or of Great Britain, was followed up by the laying down of the following principle, viz:

Where a tax or duty is imposed upon a small portion of the producers of any commodity, from which the great body of its producers are exempt, such tax or duty necessarily remains a burden upon the producers of the smaller quantity, diminishing their profits, which cannot be added to the price, and so distributed among the purchasers and consumers.

It is contended in reply that this principle is true only in those cases in which the ability on the part of the majority of producers to supply the commodity thus taxed is fully equal to the demand.

The question whether the consumer or producer pays any imposts levied upon the importation of certain commodities does not depend upon whether the body of foreign producers is large or small relatively to the body of domestic producers, with whose products theirs are to come into competition, but simply upon the question whether or not the existing home production is equal to the demand. If it be not equal, and a quantity equal to one-third or one-fourth of that produced at home be really required, prices must go up until the foreign producer can be tempted to supply the remainder, and the consumer will pay the increased price not only upon the fraction imported, but upon the greater quantity produced within the importing country as well. And the tendency of all the evidence in this case, British and American, has been a most explicit and direct confirmation of this principle.

The British evidence, to which I shall immediately call your attention, proves beyond a doubt that when duties were imposed upon mackerel of $2 per barrel, British exporters to the United States realized a suffi cient increase of price to enable them to pay those duties and still receive a net amount equal to the average price received before those duties were imposed, as well as after they were removed.

Upon a careful examination of the United States testimony, it will, I submit, appear that during those years when duties were imposed upon British-caught fish, the price of mackerel when landed by United States vessels from their fishing voyages in the bay, was to the full extent of the duty in excess of the price they commanded after the duty was repealed, or before it was imposed.