doubt that both in Canada and Australia local iron industries, protected by bounties, will spring up and so increase that at the end of twenty years a very considerable amount of the industry now being carried on in England will be transferred to the colonies, and we shall have a repetition of what took place in the United States. But such firms as ours, with a good organisation, will not allow themselves to be outdone by such a condition of things, and would, as we have already done to a small extent, start themselves manufacturing in the colonies. I take it that, looked at from the point of view of the development of Great Britain, such a transference of industries from England to the colonies would be a very severe blow to the Old Country.

I need not remind you of the unfairness to a British industry when a large trust, such as the American Steel Trust, in order to secure a new market, puts its surplus down under cost price. We have had to contend with such a condition of things, especially in Canada.

All these considerations will show you that, though we do not ask for protection, a scheme of preferential tariffs, or Zollverein, throughout the Empire would be of immense benefit.

As regards protection, there is one point on the other side which is of interest. When Corporations, such as the American Steel Trust, export under cost price, or when the Germans, at times of financial pressure, or for other reasons, export at cost price, English manufacturers of a certain class of iron goods may take advantage of this state of things, and by buying the iron in its half-finished condition under cost price, and doing the finishing stages, on which there is a great deal of labour (cheaper in England than in the United States) in England, they may be able to compete with and beat the American or German on the finished article. I give, as an instance, Sheet Iron, which may be manufactured in all its stages in England, or the preliminary stages, namely, the Steel Bar, may be obtained from Germany or America.

Subjoined are my answers to the Chamber of Commerce, along with the questions to which they refer :

Question.-Have hostile foreign tariffs injured your trade in any way? If so, give instances. Answer.-Yes; the most noticeable instance being in the case of the United States. This is one of the largest markets in the world for Sheet Iron, but British manufacturers are entirely prevented from competing in consequence of the hostile tariff, though if this did not exist, they could hold their own against American manufacturers.

Question. Has the policy pursued by foreign nations of a preferential tariff in favour of their own colonies affected your trade adversely? If so, give instances. Answer. The result has been insignificant.

Question.-Has the preference recently given to British trade by the Canadian Government been to the advantage of your business? If so, give instances. Answer.-Yes. In Canada, England is in com

petition with the United States for the Sheet Iron business, and with Germany for the Wire Netting business. The preference given by the Canadian Government has been helpful in both instances to English manufacturers.

Question. Could you export goods to colonial or foreign markets where hostile tariffs now exclude them if these tariffs were modified? Answer.-Yes; see answer to question 1 as to foreign markets. As regards colonial tariffs, the tendency of these is to foster colonial industries.

Question.-Has your trade been affected by foreign trade combinations made possible by foreign protective tariffs? Answer.—To some extent; but greater danger is threatened in the future, especially in the case of the United States at times of depression in their home markets.

Question. Is your export trade principally done with British. colonies or foreign countries? Answer.-Chiefly with our colonies.

Question. Do you find your trade with British colonies increasing or decreasing? Answer.-Increasing.

Question. Do you find your trade with foreign countries increasing or decreasing? Answer. -Decreasing.

Question.-Have you in recent years purchased foreign manufactured goods formerly produced in this country? Answer.-Yes-if by manufactured goods are understood such productions as steel bars and wire.

Question. To what extent, if any, is your home trade interfered with by foreign competition? Answer. Not to any considerable

extent.

General Remarks.-A tariff scheme, which would help to develop our colonies, in encouraging their production of raw materials, would benefit us by making them still larger consumers of our manufactures; and not only would it increase the volume of business, but it would tend to preserve that business for the British manufacturer in two ways:

First. By the preferential tariff, which would give him an advantage over his foreign competitor, and

Second. By checking the tendency of the colonies to put a protective tariff on manufactured articles in order to develop their home industries. In our case, such tariffs have already caused us to start certain industries in Australia; but we suppose that a transference of industries from England to the colonies would not be looked upon as a desirable thing by even the keenest free trader. J. LYSAGHT

ΟΝ

THE RELATION BETWEEN RATES, EXPENDITURE ON
REMUNERATIVE WORKS, AND RATE OF INCREASE OF
POPULATION IN FIFTY-EIGHT BRITISH MUNICIPALITIES

(1) The statistics on which the following results are based were taken from Burdett's Official Intelligence (now called the Stock Exchange Official Intelligence), Vol. VI, 1888, pp. 26-7, and the Stock Exchange Official Intelligence, Vol. XX, 1902, pp. cxxiv-cxxv. The statistics there published are of value, but no sound judgment can be based upon them until they are quantitatively reduced, and a calculation made of the actual coefficients of correlation between the quantities involved.

It is also of interest to ascertain how far the rate of increase of population affects the relationship between expenditure on remunerative works and the magnitude of the rates. The data for rate of increase of population are taken from the Census Report of the Registrar-General for 1901, pp. xii-xiii. The investigation is confined to towns of over 50,000 inhabitants.

The Official Intelligence may fairly be looked upon as having no individualistic or socialistic bias in the preparation of its material.

=

I premise here that the coefficient of correlation is a statistical constant marking the degree of relationship between two quantities, and that it ranges from a value = 0, when the two quantities are quite independent, to a value 1, when we may suppose their variations to be absolutely dependent or causal. A partial coefficient of correlation. measures the relationship between two variables, when a third variable remains constant, e.g., we express what would be the degree of correlation between rates and remunerative expenditure, supposing the population to remain constant. We are thus able to remove from consideration any disturbing influence of changes of population on the relationship between rates and remunerative loans.1

(2) Two separate investigations have been made, for reasons which will appear later.

In the first investigation the three variables dealt with are:

r = municipal rate (excluding poor-rate) per £ of assessable value (1900-1901).

W = total loan for remunerative work per £ of assessable value (1900-1901) raised up to the same year.

Here 58 boroughs of over 50,000 inhabitants were available.

In the second investigation the variables dealt with are:

For fuller statements as to the theory of correlation see Yule: Journal of

the Royal Statistical Society, LX, December, 1897.

=

w =

Increase of municipal rate (excluding poor-rate) per £ of assessable value between 1886-7 and 1900-1.

Increase of loan for remunerative work between 1886-7 and 1900-1 per £ of the mean assessable value for the years 1886-7 and 1900-1.

And p as above.

Here only 43 boroughs were available. My reduced data are given in the Table III. appended to this paper.

It seemed more symmetrical to take the rate of increase of rates, of remunerative loans, and of population, than to consider rate in the last case only and totals in the two former; at the same time this treatment might possibly be considered unfair to the problem of remunerative work, since loans for such work may not be immediately productive, and in consequence may be advantageous in reduction of rates only after the lapse of a number of years. Two problems are accordingly here considered-namely, (1) the correlation between total rates and total loan expenditure on remunerative work, (2) the correlation between rate of increase of rates and rate of increase of expenditure on remunerative work. In the two cases the answer is of a different character, and there are remarkable differences in the individual correlations.

In an article on "Municipal Debts and Local Rates" which appeared in the Times of January 9th, 1903, the author deals with 35" Representative Boroughs." These 35 are included in my totals of 58 and 43. I shall refer to the latter as O.I.B. (Official Intelligence Boroughs) and to the former as S.R.B. (Supposed Representative Boroughs). If they are really representative boroughs there ought to be small difference in the constants for the two cases. I give the statistical constants for O.I B. and S.R.B. in order that the reader may judge in what degree they really were a representative selection.

(3) Before passing to the correlations, it may be of interest to tabulate the means and variabilities of the quantities, the variability being measured by the usual statistical constant, the standard deviation.

Here the total rate (r) and the increase of rate (r) and their variabilities are measured in pence. The loans for remunerative work

(w), the increase in the loans (w), and their variabilities are given by the multiple they are of the assessable value.

So far as these statistical constants are concerned there is not a very sensible difference between the O.I.B. and the S.R.B. except in the case of the mean loan for remunerative work.

There are two very striking features in this table :-(1) The rates have increased by about 20 per cent., and the loans for remunerative work by about 100 per cent. in the fourteen years under consideration; (2) there is exhibited extraordinary variability in both rates and remunerative loans, as also in the increases of these quantities and in the rate of increase of population in this group of municipalities. It is clear that there is no uniformity of system either in rating or in loan raising, no common body of experience guiding the financial conduct of municipal affairs.

On the basis of the above numbers, theory shows that with a thousand municipalities of the above character we should expect rates varying from 2s. to 7s.; actually with a sample of fifty-eight municipalities, we find rates from 2s. 9d. to 6s. 8d. For a thousand municipalities, theory gives us variations in increase of rates from a diminution of 1s. 5d. to a rise of 3s. 1d.; experience of forty-three towns shows a range from a diminution of only 11d. to a rise of 3s. 4d. On the whole the results may be said to be in good accordance with the distribution of frequencies that we get in other branches of statistics, and thus to warrant the application of modern statistical methods to municipal finance.

(4) Turning now to the main point of the investigation-the question of correlation-we have the following table :—

In this table the probable errors of the correlation have been given as well as the correlations themselves. It will be at once seen that these probable errors are relatively large, a result we might naturally have anticipated from the fewness of the towns dealt with. Still they are not so large as to vitiate all drawing of conclusions; they suffice,