The League of Nations
Economic Policy—the Next Stages
THERE have been many descriptions of such separate achieve- ments 'of the League of Nations as the financial restoration of Austria and Hungary ; the settlement of refugees in Greece and Bulgaria ; the removal or reduction of impediments to international trade, both before and since the World Economic Conference of 1927. But there have been few attempts to trace in these multifarious tasks a definite policy or a con- sistent line of development. Why does the League, whose primary business is the preservation of peace, occupy itself in such matters Y By what authority does it act By what principles is it guided ? To what goal does it move ? It may be worth while to devote a page to trying to answer these questions.
We shall find no clue that takes us far in the specific pro- visions of the Covenant. True, we have the article about the " equitable treatment of commerce " ; but that is vague enough- to mean much or little at will ; and wide as it is it neither contemplates, nor even covers, such work as the League has done in Austria and Hungary. The fact is that no such work is specifically prescribed. If we wish to find the authority for it we must turn to the opening words of the Preamble, which descriLe the general purpose of the League : " In order to promote international co-operation."
During the period immediately after the War, when the whole world was mainly concerned to know how to restart the processes of production and trade, it was natural, there- fore, -to ask how the League could help. There were many things for which, as a, world organization, it was not suitable. Urgent executive action in hurrying food and raw materials or repairing railway communications in distressed countries was best undertaken by such a body as the so-called Supreme Economic Council, a body composed of the Allies in the War who still had in their hands the effective machinery of war- control. So, too, such questions as " Reparations," which long impeded the general world recovery, could only be handled by the belligerents directly concerned. But there was one problem of world-wide interest, eminently suitable for objective and impartial examination by a world organization. Through- out Europe, and many other parts of the world, currencies had lost or were losing their stable value. Before the Wan though there had been many different currencies, nearly 'all had a fixed value in relation to gold. In effect, therefore, the whole world had had a single, stable medium of exchange. This new wastage of currencies was destined to threaten the Very existence of some countries, and to be for some years the principal obstacle to the international trade of the world. This problem the League helped to solve both by precept and by example ; by precept through securing a unanimous and authoritative doctrine from the chief experts of the world at the Brussels Financial Conference of 1920 ; by example in the practical work it did in Austria and Hungary. This last was pioneer work, and both the Dawes Plan for Germany and the countries which restored their finances by national effort were greatly helped by the experience gained in the restora- tion, of what seemed two of the most hopeless cases in Europe.
The work of stabilizing currencies is nearing completion. For about four years now currency fluctuations have ceased to be a primary factor in international trade. But it is still not quite finished, There are still some tasks in this sphere for. he world to undertake, for the currencies of some countries, though in fact stable, have not been definitely stabilized. And there are some currencies, whether or not legally stabilized, which are not on a sufficiently safe and sound basis. Apart from Austria and Hungary (where the work may be regarded as finished), and Estonia, where .the League has strengthened the Bank of Issue, and Danzig where it introduced a new currency, the League is now stabilizing the currency in Greece, working on a similar scheme for Bulgaria (for, in. both. Greece and Bulgaria the refugee work needed to be followed later by a monetary scheme), and it is conducting a preliminary inquiry in Portugal with a similar purpose. There remains, therefore, a substantial work still to be .done in completing,
or fortifying, the stability of certain currencies in terms Of gold. Whether, as currencies become stable in relation to
gold, and thus to each other, it will be possible to make them more stable in relation to commodities, that is, to keep the general world-price level stable, is a most interesting question which, unhappily, I cannot now discuss.
• The great progress which had been made by 1925 in restoring stable currencies, the first condition of all recovery of inter-
national trade, opened the way for a general survey of the whole economic situation and its main troubles. This was a much wider, more complex, and more difficult task ; and it was necessary both to choose the time and to prepare the ground very carefully. After more than a year of very elaborate preparation, with the help both of individual experts and of institutions throughout the world, the Economic Conference of 1927 was convened. It consisted of nearly 200 members, of every kind of qualification, chosen by the Governments of fifty countries and speaking with a collectiire authority which has perhaps never been equalled. The findings of this Conference, which were definite and unanimous, indicate the tasks that lie ahead both for the different countries separately and for the League if the world is to enjoy a pros- perity proportionate to its resources and its productive capacity. The Conference found that the 'chief removable obstacle to greater prosperity is the fact that trade barriers, and especially tariffs, are too high, too complicated, and too frequently changed. Practically everywhere duties on manu- factured articles (though not on raw materials and food) are much higher than before the War. There are 7,000 miles more of customs frontiers in Europe now than in 1914. The number of items in customs duties is in many cases five times as great, and nearly all commercial treaties (158 out of 180 recently examined) are changeable within a year instead of lasting for ten or twelve. The essence of the Conference's policy was therefore greater freedom for international trade, a reversal of the policies which have made political frontiers also very formidable economic barriers.
In its detail this is a tremendous task, both for the League and its Member States. Already there is a network of specialized machinery at work ; an Economic Co mmittee com- posed of the chief economic advisers of a number of countries ; experts on customs nomenclature and classification ; others examining standard forms of commercial treaty ; others following the progress in removing prohibitions ; and many others ; the whole surveyed by a large new Consultative Committee, drawn from the best experts of about thirty nations, and in form, in composition, and in character a kind of annual Economic Conference in miniature. Large private institutions like the International Chamber of Commerce are collaborating. Here is a programme sufflcient• for years, perhaps many years, of patient, infinitely complex work ; each step, however, bringing its definite fruit in increased prosperity and reduced friction.
In these last two words I reach the link which connects nie with my first question. How does all this affect the cause of peace ? A few words must suggest the answer. Of all the causes which threaten future war, economic conflicts and divergences of economic interest are beyond question the most serious and the most permanent. Political 'frontiers as we know them are based upon historical facts, racial senti- ments, strategical considerations, not upon' economic needs. If they are increasingly used to block and dam and divert the natural channels of the world's economic forces, forces which have in them the gathered strength of the daily struggle for life of all peoples in all lands, sooner or later disaster must come. No system of settling disputes at the last moment can stand the strain. The flood will burst its bounds and sweep our civilization into irreparable ruin.
ARTHUR SALTER.
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