THE GOVERNMENT AND TRADE
"TWO ideas," said a shrewd and moderate observer the other day, " have come to dominate the peoples of every civilized country—first, an intense desire for increased wealth and material prosperity ; secondly, a conviction that it is the business of Governments to confer it. To this Great Britain is no exception. Our electors stake their votes on economic expectation. Of the vast unattached ' body among them, who now decide the fate of pollings, nearly every individual, when confronted with a choice between alternative Governments, asks himself or herself but one question- ' Under which am I likely to be better off ? '—and according to the answer the vote is cast. So it was in 1929, and so, too, beyond question, in 1931."
The failure of the Labour Government between 1929 and 1931 to deliver the goods, in that speaker's sense, became obvious. The numbers of the unemployed rose vastly during their term of office, and the crescendo of bad trade hit nearly every pocket in the country. Whether what they did helped this to happen is a fair topic for party dispute. But that they failed, in fact, to prevent it from happening was visible to everybody ; and on that they were condemned. What of their successors, who now hold office ? From the very early days, when Great Britain was driven off gold, there has been. a slow but pretty steady improvement, a succession of small changes for the better, whose cumulative effect over 20 months has been not inconsiderable, though it still leaves great aggregates of unemployment and discontent. How far, if at all, has it resulted from the Government's policy ? Would it have been less or greater if any given feature of that policy—protective tariffs, or the Ottawa agreements, or the trade agreements with certain other countries, or the ban on foreign investments, or the other -restrictive policies which led up to the conversion of the War Loan, or the Elliot agricultural policy—had been omitted. Asked on a party platform, such questions, of course, are promptly answered. But a serious and scientific reply is not so easily come by.
An interesting attempt toward providing answers has been made this week by the Federation of British Indus- tries. The Federation's memorandum is on the whole in the Government's favour, though it admits many loop- holes for doubt. The tariff, it finds, has greatly improved the position in the home market. But it adds the warn- ing that the improvement may be lost if other countries depreciate their currencies further—thereby inviting the question, bow far the depreciation of our own currency did, in fact, cause the improvement with which the tariff is credited. So again it notes with emphasis that the tariff " has not had the adverse effect on the export trade predicted by the opponents of Protection." But it adds that this "cannot be considered a stabilized posi- tion owing to the possibility of currency manipulation or other measures by foreign countries " ; and so similarly sets us asking whether what saved the tariff from injuring our exports was not the British currency depre- ciation which synchronized with it. And here we notice a fundamental difference between the tariff problem as it is today and as it was when Mr. Joseph Chamberlain and Mr. Asquith debated it 30 years ago. Then all cur- rencies were on a metal standard, and nobody (save the bimetallists in certain monometallic countries) had any idea of depreciating them. But now currency depreciation in one country or another is an almost daily expectation, and is conceived not merely as a misfortune to be shunned but as a weapon to be brandished.
The Federation's memorandum. is equally cautious about the trade agreements. It notes that, on the avail- able trade figures, the Dominions have done better out of Ottawa than we. But " the area of the world covered by the Ottawa and foreign trade agreements has been the most satisfactory for British export trade." Yet for that it finds other contributory causes—a production comple- mentary to Great Britain's and a currency generally linked to sterling—between whose effect and that of the agreements it is " premature to decide." And here it brings us to what is perhaps the most fundamental question of all. " Complementary production " must lie at the root of any fruitful trade agreement. It is no good hoping to sell unless we are prepared to buy. But what precisely are we prepared to buy today ?
Before 1914 what happened, broadly speaking, was that we bought raw materials and food, and sold the products of manufacture and mining. Today we are still open to buy raw materials ; but our market for imported meat, bacon, cheese, butter, and even wheat is affected by the new policy of reviving our island's agriculture. For that policy in the large much may be said ; particularly since one of our main streams of export—products of mining—has so materially shrunk. But it is a question of degree. No one seriously disputes that the money cost of home-produced food must be higher than that of foreign. But that is another way of saying that, so far as we divert home labour from industry to agriculture, we make it less productive, lower the gross value of the national output, and pro Canto the average standard of life. Up to a point there may be valid reasons for doing this—the need for a more balanced home production and for a lessened dependence on export trade, with all the vicissitudes and instabilities to which tariff and currency manoeuvres expose it. But it is, it must be repeated, a question of degree ; and its settlement, which is extemely urgent, needs to be determined, not at haphazard, but after utilizing systematically all the best economic advice available. " Only," notes the Federation's memorandum, " when the economic limits of agricultural development in Great Britain have been envisaged, will it be possible to pursue a co-ordinated policy to increase British exports, first of all to the Empire, and secondly to foreign countries."
At present nothing of the sort is happening. The ques- tion is f ettled almost from day to d.:13T by a process of pull-devil-pull-baker between Mr. Elliot's Department and Mr. Runciman's. No qualified body exists to gauge, foresee, and arbitrate what is in issue ; the Cabinet itself has neither time nor competence, and resort to bodies, such as that of which Mr. H. D. Henderson was secretary, has always been too half-hearted to produce results. New illustrations are perpetually arising. Take, for instance, the very welcome trade agreement which Mr. Runciman has just concluded with France. Nothing could be more desirable than that the biekerings and reprisals of recent years should be brought to an end. Yet it must not be forgotten that the fruit and- garden produce, which in the past have formed a great part of our imports from France, has always done •quite outstanding damage to the corresponding English producers, handicapped as these are by an inferior climate, later seasons, and higher-paid labour. Two opposed interests are involved here, between which the balance needs to be held, not merely with fairness, but with expert knowledge. Has it been ? We do not know, nor does the public. And in that very ignorance lies a prime danger for the Government. If they set up visibly some Economic General_ Staff, in whom the nation had. confidence', there- would be a feeling that at least they had clone all they could. At present there is not that feeling ; and hence the anti- Governmental drift which is undoubtedly setting in among large sections of the population. There is time to arrest it by suitable action ; but not too much time.
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