TOPICS OF THE DAY.
RUSSIAN TRADE : THE KEY TO EMPLOYMENT.
V E detested the Tsarist tyranny and all its works, and longed to see the establishment of true liberty in Russia. But our hatred of tyranny did not make us wish to interfere with the Russian system of government. Still less did we want to refuse to trade with Russia because of the bad principles on which she was governed. Now we are confronted with a Russian Government even more arbitrary and oppres- sive. Still, we no more want to quarrel with the Soviet than with the Tsarist Government, and are quite as willing to trade with them as with their predecessors in misrule.
Then why do we not begin ? Because up till now we have not been able to agree with the Russian Delegation as to the right way of mending the broken links in the chain of our commerce. What apparently is stopping the negotiations is the question of credits. The Russians assert that they cannot restore trade unless they can borrow from us the money required to set the wheels of exchange turning. There is, of course, nothing per .9e strange or unreasonable in this request. Com- mercial credits are based upon things in prospect rather than in existence—upon things that are to be made and grown in the future. They are based, that is, on the confident belief that the things when made and grown will in part be employed in reimbursing the people who lent the money, or the money's worth, to keep the makers and growers alive and at work during the process of turning a prospect into a reality. Under normal con- ditions the bankers, financiers, and merchants of England would be able to give or secure these credits for Russian traders on the assurance that they would be paid six months or a year hence out of the proceeds. Unfortu- nately, however, in the case of Russia there is a serious obstacle to the giving of private credits. The past history of the Russian Government, and its fatal and repeated interferences with trade, have devastated Russian credit, public and private. And there is not only this fear that the Soviet Government may return to their old policy of in effect forbidding trade and so making it impossible for people to pay their debts ; there is also a feeling that our financiers and merchants must not make things too easy for defaulting nations. Governments, it is argued, must be taught that unjust acts will not be so easily forgotten and forgiven and that it is bad business to cheat your customers. Although these considerations must influence private individuals, Banks and similar institutions, the Government and the nation as a whole not only have a right to look, but ought to look, at the matter from rather a different angle. What we have got to ask is, " Is it not worth our while to run a certain risk in order to renew the links of commerce in Russia, and so establish a trade which will set thousands of men at work, and may well restore the mercantile balance of the world ? "
This policy is, no doubt, open to the objection that if the Russian Government will not do what we ask them in the way of making amends for former confiscations, it is a sign of bad intentions for the future, and that, therefore, we had better keep our money to lend to nations which we know will use every effort to redeem their financial promises. All the same we hold that the policy of not helping Russia to trade is unsound. The risk that Russia will take our credits, which will. of course, be paid in goods, i.e., take our machinery and manufactured articles, and give us nothing in return, is not great. Russia, in our view, has learnt the lesson that trade is a mutual benefit and that in order to sell you must buy. But even supposing there is a certain risk of losing our money, we hold that we had better take it. If we had no unemployed, it would, no doubt, be foolish to withdraw men from making goods which could be exchanged in the Dominions, or in India, or in South America, or in the Near East, and to bribe them, as it were, to make, instead, goods for Russia --goods which would be paid for in what might prove to be phantom credits. That, however, is not the situation. We have got a million of unemployed workers, and it is better for them to manufacture something, even though it is possible that their work will largely be thrown away, than to sit idle. In a word, the fact that we have got to pay for their maintenance in any case reduces the risk, and so alters the question. In all probability, as we have said, the risk is a hypothetical one, though not one which private individuals, sore from former losses, will care to take. Therefore, in our opinion, it would be perfectly legitimate for the British Govern- ment to intervene, taking, of course, the best precautions they can for payment and to say, " We will give Russia the credits which she tells us she cannot do without. The initial sum required will not be a very great one. We shall soon get proofs as to whether the Russian Government will keep faith. If they do not, we shall at once ' shut down ' and cut our loss. On the other hand, if, as is far more likely, trade begins to revive, our Treasury will certainly be the gainer. We shall get rid of a large amount of unemployment pay, Imperial and local, and the Government will at the same time have a remunerative investment."
Under conditions like the present, when mankind is panting to get exchanges of all kinds and yet cannot exchange, there is no sort of reason why a Government like ours should not employ its credit to set turning the wheels of commerce, external as well as internal. Mr. Keynes, whose grasp on the problems of Credit and Currency is, in our opinion, unrivalled, has recently pointed out in his articles in the Nation that what we want at the moment is State encouragement of new capital undertakings " by lending the credit and the guarantee of the Treasury to finance schemes of develop- ment." This, in his opinion, has become " an inevitable policy." We agree, and it is for that reason that we have again and again advocated the expenditure of money on the better equipment of Great Britain in such matters as roads and ship-canals, and other public works which will reduce the physical obstacles to exchange. We would go further and would use our credit in the Empire to create new markets and so more exchanges.
How is the necessary money to be found ? Our answer is one which we shall not attempt to wrap up. Instead of paying off debt, as we have lately been doing, far in excess of our statutory obligations, we should use out surpluses with the direct intention of meeting unemploy. ment. Take the parable of a well-established firm which has been in trouble, but which has now very good prospects. It has a very heavy five per cent. Debenture debt. The question before the Board is how to make use of a surplus of £100,000. A director, without vision, declares that the only thing to do is to pay off debentures and " get rid of these devastating overhead charges." The wiser chairman says, " No. Put the money back into the business. We know we can make at least fifteen per cent, with it there. That is much better business than investing it in our own debentures at only five per cent."
J. ST. Loz STRKCHEY.
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