561
PUBLIC RECORD OFFICE
Reference :-
PEPEL CO.
885/25
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
PUBLIC RECORD OFFICE, LONDON
( 132 )
MINUTE BY THE ATTORNEY GENERAL.
(MB. TOWNSEND).
I agree with the views of the other members who have written their opinions as to the undesirability of this tax so far as this Colony is concerned, unless the expectations of the Committee, referred to in paragraph 9 of the Despatch of the Secretary of State as to the large demand there will be within the Empire, come true.
It seems to me that the object of the Committee viz: to foster English mills-could be attained by imposing the tax in Nigeria and Sierra Leone where there is a large palm kernel trade, which is well esta- blished. This might be considered unfair, but as the scheme so far as West Africa is concerned appears to be only a matter of expediency for accomplishing a certain purpose, it would be difficult to criticise the scheme if the question of fairness is to be confirmed to this point alone, and I think the expediency of not running the risk of killing or giving a serious blow to the industry in this Colony deserves recognition; a risk which would not be entailed in Nigeria or Sierra Leone.
If however the tax has to be imposed here the only way that suggests itself to me of getting over the difficulty as to obtaining crushing certificates would be for the English mill owners to form a mill owners association for the purpose of buying kernels for their mills. Such an association should, if the expectations of the Committee to which I have alluded above come true, be able to buy readily all consignments from West Africa and give a satisfactory certificate that all those consignments are crushed in. English mills, and a certificate of delivery to such a body by an exporter should be sufficient for remission of the tax. Such a body should in its own interests ensure that all kernels it receives are crushed in English mills, as if it fails to satisfy the Secretary of State or some Government officer that that is so its certificates may not be accepted.
(Intd.) W. R. T.
25th October, 1916.
MINUTE BY THE COLONIAL SECRETARY.
(MR. A. R. SLATER, C.M.G,).
DRAFT BILL TO RAISE EXPORT DUTIES ON PALM KERNELS.
The principle of the Bill appears to have already received the considered approval of the Secretary of State and I feel therefore considerable diffidence in submitting any comments thereon, but as His Excellency has invited comments on the papers generally as well as on the actual text of the draft Bill I offer the following observations.
2. One reason advanced for the proposed legislation is " to break the hold of the German" over the trade in West Africa in order that German traders may not abuse British hospitality in West African Colonies. It is stated that German traders have been the political instruments of the German Government. Frankly I have seen or heard no evidence of this as far as the Gold Coast is concerned in any case if the German traders here made the undermining of our influence or prestige one of their principle objects they were singularly unsuccessful. But, assuming that they did abuse our hospitality, I presume that they will not be allowed to return to the Colony: does it necessarily follow that our English firms are to have no dealings with Germany?
55
3. In the first paragraph of section VII of the Committee's report it is stated that with the "exception of a small fraction which came to the United Kingdom all exported kernels during the last 30 years went to Germany. Who exported Gold Coast kernels to Germany? Very largely English firms-see the enclosure B to the Acting Comptroller of Customs' report of 14th October 1916 copy of which will I assume be sent to the Secretary of State. What are the grounds for restricting these English firms to England as the market for their kernels? If it is considered necessary in the national interests-e.g. on account of the glycerine that is obtainable from palm kernels-that the kernels should not go to Germany is not the proper course to prohibit their export to Germany?
( 153 )
4. If such prohibition is not necessary for defence purposes we come to the argument that it is desirable for general reasons to secure this trade for English manufacturers. I personally find it very difficult to believe that we shall establish any trade on a stable basis by the mere artificial device of hampering a rival or restricting international trade. I readily admit that in 'vital' industries we cannot afford to let the free play of economic forces endanger the safety of the Empire in the mattere.g. of munitions of war, and if His Majesty's Government assure us that the palm kernel trade is a 'vital' industry in this sense I have nothing more to say, except to repeat my opinion that in that case kernels should be prohibited from export to Germany or any other auspected foreign country. But unless this is the case and no such allegation was made in the original terms of reference to the Committee, which was appointed" to "consider and report on the present condition and prospects of the West African trade in pala kernels "and to make recommendations for the promotion in the United Kingdom of the industries dependent "thereon," I should personally, as at present advised, find myself considerably at a loss to know how to justify the export duty to the Legislative Council. I should at once be met by the statement that such an export duty will kill the local industry-with this point I deal later-but even assuming it will not so kill it some reason for the duty must be adduced. If it is protection of the English crusher the West African will want to know why the English Government does not protect him in the obvious way by penalising the product of the German crusher. If it is the defence of the Empire he will want to know why we do not prohibit kernels going to Germany at all. To neither of these questions do I at present see any satisfac tory answer
5. I come now to the actual Bill and the concrete proposals therein. The salient feature of it is Bection 3:
"Subject as provided in section 13 there shall be raised....an export duty of 2/- per cwt. (£2 per ton)....on all palm kernels exported from the Colony."
The provisions of section 13 contain the exemption in favour of palm kernels which are certified to have been delivered and crushed at a mill in any part of His Majesty's Dominions. It is significant however that this exemption, even in the Bill itself, comes as a kind of after-thought, and it is still more significant that the Acting Comptroller of Customs writes as follows (in a report in which he obviously desires to bless the proposals) :---
ff
"The exporter will never know at the time of shipment whether he may or may not have to pay the duty and naturally as a business man he will insure against loss to himself in the matter by deducting the duty from the price he pays in the first instance to the native. The net result "will be that unless some other condition of exemption be found the native producer will be vic- "timised to the extent of £2 per ton whether or not the duty has to be paid."
Again
"Our merchant does not buy as a rule for any special market and the fact that it is known at "the time of purchase that he may have to pay an export duty will give him a sort of excuse for go "paying a lower price. He will not explain, of course, to the native seller that the kernels will 'to Hamburg only if they fetch £23 per ton there as against £20 per ton in Liverpool."
In view of these quotations it seems reasonable to assume that generally speaking the native producer will receive £2 per ton less for the kernels, and that the remission of £2 per ton will go simply into the poc kets of the merchant-and this result seems probable irrespective of any probable "ring": from the mer- chants' point of view the precautions would be reasonable enough.
6. The impracticability of obtaining a certificate of crushing is emphasized both by the Committee which drafted the Bill and by the Acting Comptroller of Customs in his report of 14th October. Unless suggestions from other Colonies have provided a solution of this difficulty it alone seems fatal to the whole proposal since it appears to be regarded as axiomatic that a mere certificate of landing will be inadequate to ensure crushing in the United Kingdorn. The Attorney General (Mr. Townsend) has suggested the formation of a Mill Owners' Association which could give the certificate required, but does not this fore- shadow a body which would tend to depress prices for the kernels?
7. A minor point in the Bill seems to me objectionable the clause (No. 4) which empowers the Governor in Council (i,c. in Executive Council) to increase the export duty. This ousting of the Legislative Council in a matter of increasing taxation seems to me not only technically unconstitutional but highly pbjection- able. It is quite obvious from discussions at home and out here that the Bill will be warmly opposed: it should not be possible for it to be made stronger still by the mere order of the Governor in Executive Council without giving the legislature the chance of objection, and in view of our recent extension of the Legislative Council the innovation appears to be particularly inopportune. Incidentally I may say that the clause in the cocoa export duty Ordinance which gives the Executive Council power to vary the duty (though in a downward direction only) seemed to me unfortunate for a similar reason-questions of taxation are essentially for the Legislative Council-but as it might well happen that the cocoa duty will have to be reduced or remitted at very short notice there was some excuse for the clause in that case.
i