Trade Realities
TORD PASSFIELD contributes a preface to the _ latest publication of the Empire Marketing Board, The Growing Dependence of British Industry upon Empire Markets, in which he expresses the hope that this personal diagnosis by Mr. F. L. MacDougall, the Australian repre- sentative, " may encourage the wider discussion and more comprehensive treatment " which this question of Empire trade demands. We feel that the time has come to take up this suggestion in a survey of realities, as distinct from aspirations, in connexion with British export trade.
Taken in conjunction with the recent Interim Report on British Marketing Overseas, published by the Com- inittee on Education for Salesmanship, this diagnosis is frankly alarming.
It is a fact that the volume of world trade to-day exceeds by 20 per cent. that of the best pre-War years, but that Great Britain secures only 11 per cent. instead of 14 per cent., of that trade, a decline of 3 per cent. which is not simply due to the increased use in the world at large of raw materials as compared with manufactured products, nor to the economic nationalism which is itself a legacy of the War years. The latter is, of course, a prime factor in the problem, and the recent increase of tariff rates in Australia is proof enough that the adolescent British nations have not yet sown the wild oats of self-sufficiency.
But the discussion of Empire Free Trade in the House of Lords on Monday has brought into relief the amazing misconceptions still cherished by certain minds as to the nature of the British Commonwealth and as to the function of the " Empire " in bringing about an era of general prosperity and world peace.* Lord Passfield gently but firmly reminded the Beaverbrook Crusaders that Canada, Australia, &c., are " free and independent nations," not at all inclined to stretch the bounds of sentiment to the point where it conflicts with (what they conceive to be) their business interests. He might have added that the whole purpose of Empire Preference is stultified when the effect is, as is actually now the case in Australia, to make a Dominion Government create tariffs so that this country may be accorded a preference.
Of course, if you were to ask the average business man what was wrong with British trade, he would probably say off-hand that this pernicious anaemia was the result of obstinate deference to the shibboleths of Free Trade, when most of our competitors continue to demand and obtain from their Governments the protection of tariffs. He might have heard of the recommenda- tions of the World Economic Conference, and of the movement towards freer trade centred round Geneva, but, being a " practical " man, he would assert that there are as yet very few tangible results from the recommendations of that Areopagus of economists. (As a matter of fact, in Europe the higher tariffs move- ment has been definitely checked, and the hot-air screen of the United States of Europe conceals a very real, if dawning, recognition of the folly of tariffs.) Yet some- how, by some uncanny sense that the issue is not so simple as it appears, that same man would probably stop short of proposing that this country should give up the free imports tradition. And, of course, his instinct would be right. It cannot be too emphatically stated that tariffs are themselves a form of war in peace time, and so long as nations think in such terms they are not * The place of Great Britain in the emergent world community has been admirably defined in an article by Mr. J. H. Harley in the current number of the Fortnightly Review. advancing one step towards the co-operative world order which common sense demands. On political grounds alone, then, the Spectator is bound to deprecate any such policy as that advocated by Lord Beaverbrook and his Crusaders. Their methods of reviving British trade are in flagrant contradiction of the movement towards peace and disarmament, of which Great Britain has happily now resumed her leadership.
In the publication to which we have referred Mr. MacDougall argues in effect that Great Britain should develop her " sheltered markets " in the Dominions with the adventitious aid of Empire preferences. By this means he looks for a security for British trade, comparable to that which the United States enjoys from its immense home market. The latest action of the Australian Government, as also Canada's tariff sparring with the United States, would seem to show that this is, in any case, a false security. We would go further and liken it to the " Safety First " cry which ruined the chances of the Conservative Party at the last election With all those persons who would not in any case have acted on that principle. The very title of Mr. MacDougall's monograph is ominous. It suggests that British manu- facturers and some of the Conservative politicians who would fain control the Empire Marketing Board are disposed to take the line of least resistance—are in fact resigning themselves to the fact that British industry is to be dependent upon Empire markets. They despair in fact of any positive solution of our troubles, and fall back on the fatuous notion of " security and shelter." But so long as our business men are thinking in terms of protection, whether of Government or through Imperial preferences, they are by so much inhibited from setting their own house in order.
Cannot we, then, initiate—before it is too late—some positive policy of improving British trade ? What is the real reason for the continued decline ? That many of our older industries are still in sore need of reorganiza- tion, especially on the selling side, becomes evident more and more from day to day. The case of the Lancashire cotton trade is, of course, the best illustration. Not even to-day have the firms which enjoyed a virtual monopoly in the nineteenth century realized that their time of prosperity can never recur. Many of them (cf. a letter in the Manchester Guardian on Tuesday) arc still blind to the faults of their selling organization and policy. There is, again, the question of overhead charges, the bur- den of which bears most heavily on those industries which were over-capitalized during the boom period. The position is simply that, whereas in other countries the collapse of the currency has automatically solved a great many problems by destroying all inefficient uhits and spreading the losses entailed by trade dislocation over the whole community, in this country the industries themselves have to bear the burden, and professional loyalty, as in the coal trade, is making it exceedingly difficult to eliminate the inefficient concern.
We may take it for granted, nevertheless, that British business men as a whole now appreciate the fact that goods do not sell themselves, a slogan which has naturally been thrown at their heads now for some years. Then, sonie of them may say, British industry does not get as much or as long credit as certain other nations. Since the initiation of the Exports Credit scheme, which we have always cordially approved, that protest has really been invalid. Time and again it has happened that a British firm has put in a demand for credit facilities — which have been accorded—and has then failed to obtain its contract simply because some foreign firm has been able to deliver the identical goods or services at a lower price ; and this, since 1926 at least, has nothing to do with currency fluctuations.
Here we come, then, to the hard truth about British trade, a truth which was driven home by Mr. Arthur Michael Samuel, M.P., in a speech at Camberley on November 22nd, namely, that " our goods are too dear." That, and none other, is the reason why we are not getting our share of world trade. Mr. Samuel, as a former Minister for Overseas Trade, and also Financial Secretary to the Treasury in the late Government, speaks with authority, the more so as he does not give any finicking party bias to his remarks. In his speech he pointed out, and we must agree with him, that the idea of keeping children at school for the purpose of keeping them off the employment market, plus the granting. of pensions at an earlier age, is no solution of this country's unem- ployment problem. It would simply mean that those in employment would increasingly have to provide out of an almost stationary wealth-production the extra tax revenue, whereby those out of employment should be kept alive. It would mean also that the goods pro- duced under such circumstances must be very dear— too dear for home consumption, and unsaleable as exports. As Mr. Samuel says, " what we want is more work for more people, not less people to do an even smaller amount of work."
- Yet who would deny but that the slippery slope con- ceived by Mr. Samuel is not the slope on which the present Government has hitherto been gracefully sliding back ? Certainly Mr. Snowden has got his Parliamentary followers into line again by his firm decision last Friday. It it not enough, however, to intimate that for the present the limit for financial commitments has been reached. Nor is it enough to appeal to party loyalty, as Mr. Ramsay MacDonald did at the London Scots Labour Club on the same day. Here is a great chance for bold leadership. It is a case of stopping the rot, and by some positive lute „f attack rebuilding the devastated regions of British trade.
Mr. That las has made it perfectly clear that his mind is set, above all, on developing British trade. He has, therefore, diagnosed the malady correctly. The schemes that he has outlined hitherto, however, are mere palliatives where they are not sleeping draughts. On the positive side he has to his credit his arrangement with • the Prudential Assurance Company to finance credits for the motor export trade. One hears vaguely, too, of heart- to-heart talks with manufacturers, and there is, of course, his Canadian expedition. We are not of those who would disparage what he was able to do there. Now, however; we are glad to see that the Prime Minister has taken a hand. He is continuing his luncheons with economists who represent—without distinction of party— some of the best business brains in the country, and he is evidently fully alive to the danger of the Labour Party becoming " a mere party of public relief." It is because we have faith in the practical common sense of his followers that we have such high hopes of tangible results developing at once from the co-ordinating efforts now under way. There is no reason why by " systematic, voluntary co-operation " a similar non-party effort should not succeed now, as was achieved by the Minister of Munitions during the War. The example of America is there to drive home the lesson of the moment. When Mr. Ben Tillett said at the Trades Union Congress in September : " We must organize as America has organized," he might have been alluding specifically to this need for economic co-operation between Government, employers and employed, and the phrase need - have nothing to do with Empire Free Trade, though it is quoted so frequently by champions of the latter.
Will the Prime Minister and Mr. Thomas have the courage—as Mr. Snowden had at the annual party con- ference, when he as good as told the Socialists that they were talking nonsense about the Bank Rate, &c.— to tell every single British business man with whom he comes into contact that " our goods are too dear," and base any future policy on this fact ?
That means in practice speeding up Rationalization within each industry, and reducing the waste effort in distribution, so as to reduce costs of production. A great deal can be saved that way. And it is also the first step. Not until costs of production are reduced from that end can the present Government even contem- plate the next step, which many people think to be necessary. It is suggested, in fact, that responsible trade union leaders should tell some workers' groups that, if they would practise Socialism as well as profess it, the most highly paid must be prepared to accept temporarily—the mere fact that it is a voluntary accept- ance makes all the difference—lower rates for the benefit of lower cost of production and for the sake of their fellow-workers in lower paid industries. We know of a case where this procedure was actually followed, and the greater volume of work secured soon brought the wage rate up again. Realists in Great Britain may as well face the fact that for the next ten years or so, whatever be our practice, it will be very difficult to enforce in all the signatory countries the provisions of the Washington Hours Convention. We are not of those who disparage the Hours Convention, nor did we support the late Government in their refusal to ratify. On the contrary, the sooner the standard is set up the better, for it is admitted that the labour conditions for which the I.L.O. is working represent the best return in efficiency, and sooner or later the States which now seek to infringe that Convention will come to see the force of that argu- ment. In the meanwhile, however, we should be merely Micawber-like in making our trade policy depend on the assumption that the cost of production of foreign goods will in the near future approximate to the cost of goods produced in this country. " Our goods are too dear" ; that is the pill which British producers have to swallow, and the sooner they swallow it, the better,
Previous page
