Imperial Trade
IL—The Policy of Stabilization [Mr. Robert Boothby, M.P., continues the discussion he began last week on Empire Marketing.—ED. SPECTATOR.] IN dealing with the question of price stabilization, three considerations present themselves. The first, which has already been mentioned, is the necessity for organizing the Empire as a single and self-supporting economic unit. The second, the necessity for organizing scientifically, with adequate reserves, the food supplies which are vital to our existence. The third, the necessity for preserving our own- farmers as far as possible from fluctuating prices over which they have little or no control, and which have been primarily responsible- for reducing agriculture to the parlous condition in- which it finds itself to-day.
-At the present time there is a world tendency away from unfettered competition and towards combination. This is not "Socialism" in one generally accepted sense of that much-abused term, for it does not involve State ownership. It is merely a recognition, by producers in the basic industries, of the fact that the economic doctrine of laissez-faire involving cut-throat competition, which was peculiarly suited to the period- of expansion and development during the nineteenth century, produces chaos and anarchy when applied to modern conditions. Attempts are being made to control both the volume of production, and prices, simply because the producer can no longer afford to allow himself to be bedeviled at every turn by violent fluctuations. He wants to be able to contract ahead, and he wants to know more or less what sort of price he is going to get, otherwise he simply cannot carry on. In a word, he wants stability— the watchword of the present era.
The formation of the European Steel Cartel is a recent development of this policy. And a similar trend is to be found in the widespread movement towards what is known in the United States of America as "orderly Marketing."
I hrtAie not space, adequately to deal with the remarkable expansion of co-operative marketing during recent years ; the annual value of produce marketed through centralized co-operative associations in the United States alone exceeds 2,200 million dollars. But mention must be made of the development of producers' pools and combines which has already taken place within the Empire. To take Australia first. The Commonwealth Government has adopted the principle of compulsory organization for export, and Acts have been passed constituting a Commonwealth Dairy Export Control Board and a Commonwealth Dried Fruit Export Control Board. There are, further, three wheat pools, representing Victoria, South Australia and New South Wales, and Western Australia, in respect of each of which there is established a Wheat Board responsible for the purchase, collection, storage, financing, shipping and marketing of the grain. These pools are not at present compulsory, but the purchasing agents are under the control of the State Governments concerned. The grain exported to the United Kingdom is distributed by special agents in London.
In Canada the growth of farmers' wheat pools in Saskatchewan, Manitoba and Alberta, culminating in the formation of the Canadian Co-operative Wheat Producers, Ltd., with headquarters at Winnipeg, is a fascinating story. The formation of these organizations was facilitated in the initial stages by the assistance they received from the State, the provinces advancing 85 pep cent of the share capital required on particularly favourable terms. Eight of the chartered Canadian Banks agreed to provide 25 million dollars for the purpose of financing the inter-provincial wheat pool.
New Zealand has gone farthest of all, the meat, dairying, and fruit trades, each possessing statutory control boards, vested with large powers by the State. The meat board has been functioning longest, and has proved very successful. It consists of five persons elected by the meat producers, two appointed by the Government, and one appointed by the stock and station agents, and its present activities are mainly concerned with the control and inspection *of the system of grading and with the regulation of shipmtnts.
The methods by which these organizations have been developed vary. In every Dominion State action, involving legislation, or financial assistance, or both, has been taken in respect of some of them. But the objective is the same in all cases—the stabilization of prices, by ensuring a steady flow of produce to market and by creating, if necessary, an artificial lag in economic changes s0 as to give time for social and psychological adjustments to be made both by producers and con- sumers, or, if the changes are only temporary, to eliminate them altogether.
Great Britain therefore finds herself to-day confronted not only with a decaying agricultural industry, due to fluctuating prices over which she has no control, but with a rapidly expanding growth of combinations and pools amongst producers overseas which have not only proved to be highly successful in action, but which increasingly dominate her home markets. And the question arises, can we afford to allow a state of affairs- to continue here which may benefit a few speculative middlemen but which, by reducing the marketing of agricultural produce in this country to a Condition of elm:is, jeopardizes the food supplies on which we depend for our very existence ? One thing is clear. The only method by which prices can be stabilized and an even flow of agricultural produce maintained (a) into this country, and (b) to • British markets, is by the application of the principle of centralization to the importing machinery. The aiguments against State trading are obvious and have been well summarized in the Report of the Royal Com- mission on Food Prices (paragraphs 320-333). But the control of imports through a statutory . body would not involve "State trading" in the generally accepted sense of the term. The basis of any scheme designed to reduce fluctuations by averaging out prices over a period must be the principle of insurance, and the co-operation of the producers' pools in the Dominions is essential if it is to succeed.
An Imperial Wheat Pool might, in the first instance, -be set up, with a guarantee of interest and capital up to a fixed amount by the British, Canadian and Australian Governments. The objective of the Pool would be to regulate the flow of supplies to the market and thus "steady prices by building up a wheat reserve in years of plenty and unloading it in years of shortage. For this 'purpose the storage of wheat in granaries either in this country or in the Dominions, or both, would be necessary. In this connexion even comparatively small reserves, involving a carry-over in bumper years of not more than 10 per cent. of the total Canadian and. Australian harvests, would have an enormous effect in stabilizing prices. The commercial transactions of the Pool could be financed *without difficulty by British and Dominion banks, for it would act only as a kind of reserve central institution, not intervening in the market unless prices fell unduly low or were forced up too high by speculative operations.
A much more ambitious scheme was outlined by Mr. Bruce, the Prime Minister of • Australia, at the Imperial Economic Conference of 1923. After emphasizing the importance, for strategical purpoies, of an Imperial wheat reserve, he advocated the establishment of a National Purchase Corporation to control all foreign supplies of wheat and meat for this country, and also certain national reserves of these commodities. Under this scheme the British farmer would be left entirely free to market his produce as he chose, and the Dominion farmer would also have free access to our markets, so long as the volume of foreign produce was sufficient to allow of the stabilization of prices through its control. Thus the control would be limited at the outset to a certain phase of wholesale business, and would apply only to foreign goods.
A scheme of this character would enable us to obtain reciprvcal advantages from the Dominions in respect of our manufactured goods, and would therefore be a great step in the direction of the goal, now desired by.. so many—Imperial free trade.. It need not be feared that a centralized marketing board would hold prices too high; because high prices - inevitably increase production, and supply and demand must ultimately equate. Similarly, the Royal Commission on Food Prices reported that unremunerative prices result in a decrease of production, and subsequent high prices. .
. The problem is one of enormous- complexity and difliculty. It would probably be thought more advisable to institute a Wheat Import Control -Board before -extending the system' to .meat.-- There -are to-day indica- tions, noted by the Food Commission, of the formation in the near future of a milling Combine. The directorate of this body might well form the basis of a statutory board, working within limits laid down by, and under general instructions from, the Government, but free from its direct financial and administrative control. All I would plead for, at this juncture, is that the whole question should receive the consideration to which its importance entitles it. The experience and activities of the Royal Commission on Wheat Supplies during the War should be subjected to meticulous examination. The opinions of the Dominions will have to be sought, and their co-operation obtained before any scheme can be made effective. In addition to the political objections there are technical difficulties connected with buying and selling on so large a scale, and the degree of risk involved by errors of judgment. Let all these factors be the subject of impartial investigation. But, above all, let the question be kept clear of party politics. If it is used simply as a pawn in the party game, it will be killed at birth. It is the duty of any Government to observe world economic tendencies, and then to conform to them, shaping them as far as possible in the interests of the community as a whole. The present tendency towards combination and organization within large units has no connexion with the Socialism or the individualism so ardently preached by many politicians in this country, which, in turn, have no connexion with reality. And the economic consolidation of the British Empire is too important a matter to be made the sport of purely party propagandists.
ROBERT BOOTH B Y.
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