————
Hot Bricks at Geneva
BY HARTLEY WITHERS,
THE DISTINGUISHED ECONOMIST.
An article on International Finance by one of Britain's Greatest Experts on financial and commercial matters, published by special arrangement.
It is now some years since the late Dr. Walter Leaf expressed the opinion that Europe was heading for economic suicide owing to the tariff policy which has been prevalent there since the War. As a scholar and a banker Dr. Leaf was one accustomed to weigh his words carefully, and he made this statement in his capacity as Chairman of the International Chamber of Commerce in order to call the attention of public opinion to what he believed to be the probable consequences of the policies which the Governments of the various countries of Europe were pursuing.
Not long after there appeared the famous "Bankers' manifesto" which was unhappily so described since it was signed by a large number of distinguished gentlemen who were not bankers, but were prominent in industry and commerce. It stated that there can be "no recovery in Europe until politicians in all territories old and new realise that trade is not war, but a process of exchange, that in time of peace our neighbours are our customers, and that their prosperity is a condition of our own well being. If we check their dealings, their power to pay their debts diminishes and their power to purchase our goods is reduced. Restricted imports involve restricted exports and no nation can afford to lose its export trade. Dependent as we all are upon imports and exports, and upon the processes of international exchange, we cannot view without grave concern a policy which means the impoverishment of Europe."
Since then, as we all remember, there was a great economic conference at Geneva which talked very eloquently round the subject of the hindrances to trade which are imposed in greater or lesser degree by all the leading Governments of the civilised world, in a mistaken endeavour to increase the prosperity of their countries by restricting their commercial activities. At the same time, the Council of the League of Nations set up a consultative Committee of the International Economic Organisation of the League to follow the application of the Economic Conference recommendations, and it held its first meeting in the week beginning on the 14th May. The chief purpose of this first session was to examine the work which had already been accomplished in carrying out the recommendations of the Economic Conference. Its counsels were assisted by a memorandum in the form of a "Green Book" drawn up for its guidance by the Economic Organisation of the League summarising the actions which had already been taken to put into practical effect the measures recommended by the Conference. As quoted by 'The Times" of 14th May, it began its summing up of the general situation by saying: "The tariffs actually in force at the present date appear to be on the whole higher than those in force when the Economic Conference met in May 1927."
At first sight it would, therefore, appear that the practical effect of Dr. Leaf's warning, the Bankers' manifesto, and the Economic Conference of last year, has been rather less than nothing, and this is, in fact, the conclusion that most people will be inclined to draw from the facts so bluntly stated in the Green Book. It goes on, however, to comfort us by saying that in May 1927 a number of new tariffs were under consideration by various Governments and Parliaments, which were much higher than the tariffs hitherto in force, and that the tariffs actually adopted are, on the whole, considerably lower than those then proposed.
It thus appears that such is the craving of human nature to restrict its own trade activities by keeping out foreign goods, that the tariffs which were heading Europe for economic suicide, and have, in spite of the Economic Conference been made rather more efficient since it sat, would, if it had not been for the impression produced by the Conference, have been higher still. If this is all the comfort that can be administered to those who want to see the prosperity of Europe, which is so important to the prosperity of all the world, not only restored to its former level but carried up to the much more elevated heights it is capable of reaching, the outlook for European recovery does not appear to be particularly promising; and the discussions at the meeting of the Economic Committee, in so far as they were summarised by the inevitably abbreviated telegrams sent from Geneva, give rather the impression not of a determined effort to face a serious problem, but of the delicate hesitation of a number of tenderfooted cats trying to walk over a floor of hot bricks.
It is satisfactory to note that the English representatives distinguished themselves by plain and serious speaking. Sir Arthur Balfour, while admitting that the results of attempts to remove trade barriers were rather disappointing and that a good number of increases in tariffs had taken place since May 1927, thought that the suggestion of a tariff holiday was not enough. It was not, in his opinion, sufficient merely to stabilise the present level of tariffs. The fact that, in order to produce greater prosperity it is essential to lower tariffs, does not seem to be sufficient argument for refusing to entertain the suggestion that at least their further raising should be stopped for the time being but Sir Arthur, in his desire to avoid too general and ambitious methods, suggested that it might be possible, instead of dealing with tariffs as a whole, to sub-divide them into their constituent industries and to try to reduce tariffs industry by industry. This ingenious suggestion appeared to meet with general approval, Mr. Pugh another English representative, was more outspoken in expressing his disappointment at the way in which the various Governments had treated the various resolutions of the Economic Conference, saying they had only paid lip service to it, and Mr.. Walter Layton, the Editor of the "Economist", proposed a series of resolutions, one of which embodied a request that the upward movement of tariffs should cease so as to give a favourable atmosphere for the discussion of reduction. This apparently was asking for too much. M. Serruys, who throughout had adopted an attitude of great caution, stated that Mr, Layton's proposal attempted to go too fast and too far, maintaining that the Economic Committee of the League could not order Governments not to touch their tariffs pending their deliberations.
M. Loucheur, who has held high political office in France, went so far as to contend that the only effect of reducing tariff barriers would be to transfer unemployment from one country to another, thus apparently questioning the whole purpose for which the Economic Conference had been appointed. His line of argument is one, however, which is commonly followed by less distinguished exponents of international trade problems. It leaves out of consideration the important fact that goods cannot be imported into any country unless some equivalent in value is exported in order to pay for them. If we imagine the example of a country which we will call Ruritania, which has built up a textile industry behind a high tariff wall with the result that all its inhabitants pay much higher prices for a bad article, and that the export trade of Ruritania is restricted because the textiles which used to come in from abroad are now manufactured at home—if Ruritania then reduces its tariff on textiles, manufacturers of the countries which can make them cheaper and better, will come in, all the Ruritania consumers of textiles will get better articles more cheaply, and the Ruritania exporters of commodities which Ruritania is especially well qualified to produce, will find a freer market for their products. So far from transferring unemployment from one country to another, the reduction of tariffs would at the same time give the consumer a reasonable chance of getting good articles such as he used to enjoy before the War. But as long as false patriotism blinds us with the delusion that it is wrong to buy foreign goods there is little hope for real prosperity in international trade.
Papuan Courier (Port Moresby, Papua New Guinea), 3 August 1928
No comments:
Post a Comment