Finance Public and Private
Our Declining Trade
IN the course of a discussion in Parliament last week on the trade of the country, introduced by the President of the Board of Trade, Mr. Lloyd George said that " nothing amazed him more than the apparent apathy of the public in view of the present condition of things. It was reflected in the attitude of the House of Commons. He had been at many of these discussions and he generally found that not one-fifteenth of the House took any interest at all in the trade and industry of the country, on which the livelihood of everybody depended." Making all allowance for the fact that in a speech opposing the Government Mr. Lloyd George was probably disposed to emphasize the unfavourable points in the situation, there are few in the City who would be disposed to challenge the truth of his remarks. And yet one cannot forbear, in passing, to point out that while the House of Commons, like individuals, may be quick to perceive all the elements in an unfavourable situation, it is painfully slow to discern where personal respon- sibility enters. For no small part of the prolonged depression in trade can be directly traced to high National Expenditure, and a series of legislative measures all tending to interfere with the free competitive element in business and to hand over to Trade Unions the organ- ization and control of the country's industrial activities. When the War was in full progress everyone perceived the demand which would necessarily arise for increased and cheapened production when peace arrived. Never- theless, when the moment for action arrived, all our endeavours were directed rather in the direction of shorter hours of labour, cramped production and every- thing, in fact, calculated to curtail production and maintain prices.
THOSE INVISIBLE EXPORTS.
These are matters about which I have written often and much in the columns of the Spectator, and my excuse for returning to the subject this week must be, first, its serious and pressing nature and, second, the fact that at last there appears to be in official circles and in the Press a clearer discernment of the serious state of affairs expressed in our statistics of foreign trade. On more than one occasion I have had to refer to the eagerness of Board of .Trade officials to assure us that our visible adverse trade balance was more than offset by the total of our invisible exports; and even the Times, which I am glad to note is now taking so strong a lead in emphasizing the seriousness of the situation, appeared for some time to be more anxious to stress these invisible exports than to enlarge upon the certain advance in the risible adverse trade balance.
AN OFFICIAL STATEMENT.
When introducing the subject of our trade position in the House of Commons last Monday night, Sir Philip Cunliffe Lister was content to paint the picture in what were described by one speaker as fairly neutral colours, and some of the facts and figures brought out in his statement deserve the utmost possible publicity. It is, of course, quite true that to make any precise com- parison between trade figures to-day and those of the p: e-War period is difficult, and may even be misleading owing very largely to the question of price movements. Unfortunately, however, the broad tendencies are too plainly revealed to be hidden even by this difference in points of comparison. Moreover, - the President -.of the Board. of Trade in his statement based- the figures on a process of calculation designed to allow in every way possible for the points of difference referred to, and it is upon that basis that the figures are impressive and even alarming.
SOME STRIKING FIGURES.
Thus, taking the basic value of imports in the pre-War years as 100, the corresponding figure in 1925 was 111.8, in 1926 it was 317-4 and for the first half of the current year it was 117.9. Here, then, we get a remark- able expansion in imports, natural to some extent by reason of the growth in the population, but undoubtedly requiring, if solvency is to be maintained, an equally marked advance in our exports. Again taking, however, the basic figure of 100 for 1918, the corresponding figure of our exports in 1924 was just over 76, in 1925 76, and in 1926 67'9. For the first half of 1918 the visible adverse balance of our trade was about £78,000,000 ; for the same• period of the current year it was over £209,000,000 and almost the only redeeming feature of the figures is the fact that during these periods there has been an increase in the proportion of our trade with the Empire as compared with the rest of the world.
A SERIOUS POSITION.
Doubtless there has been during the interval some growth in the figures of our invisible exports, though whatever may be the total expressed in freights and financial charges, it must be materially reduced by the loss of our holding of American railroad securities to the extent of nearly 1,000 millions, and the establish- ment in their place of a debt to the United States of nearly a like amount. In view of these trade figures, there can be small wonder that the foreign exchanges have moved adversely to us and that we cannot get back to really easy money rates in view of our gold responsibilities. Nor must it be forgotten that to the extent that our adverse trade balance increases, our power to invest in foreign securities diminishes, and with that diminishing of our loans abroad must come a growing decline in the demand from foreign countries for our own goods and services, and the more so when we find, as we do to-day, that our decline in exports is not solely connected with a diminution in world consumption but is largely due to foreign competition. Thus, it was stated by the President of the Board of Trade that our share of the world's exports of manufactured goods shrunk from 28 per cent. in 1913 to 251 in 1925, whereas during the same period the proportion in the case of America and Japan had materially increased.
INVESTIGATION REQUIRED.
Given a sufficiently competent and fearless body of investigators, I suggest that it is high time that this question of our declining trade formed the subject of inquiry by a Commission formed somewhat on the lines of the Geddes Economy Committee. The members, however, would have to be of an unusually representative and competent character, because, while the City believes that the main shortcomings would be found in such directions as extravagant Government expenditure, high taxation, State interference with the hours of labour, trade-union restrictions and defective management in some of our big key industries, it also recognizes that such an inquiry must not exclude monetary and currency policy. It is believed, however, that, as so many of the causes of our industrial depression are of a social and political character, it is necessary that the findings and recommendations of the Committee should carry with them such weight as to make it possible for any Government which might happen to be in power to give effect to them without fear of any political crisis.
ARTHUR W. KIDDY,
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