The Shackles on Trade T T is well to remember
that not only the Prime Minister of Greit,,B,titain but the ..,rmsident of, the World Economic Conference returned to this country on. Wednesday. The date for the opening of the Conference has been fixed for June 12th, and Mr. MacDonald will now, it may be hoped, free himself so far as possible from duties that may divert him from his main task of so preparing the ground for the Conference as to raise its chances of success to the maximum. He has had the advantage of conversations with M. Herriot as well as with President Roosevelt, and doubts or difficulties of which the Governments of all three countries were con- scious have been diminished, if not dissipated, as a result of the personal contacts established at Washington. What has been achieved is a community of standpoint, and the British experts who were left behind when the Prime. Minister sailed have no doubt been able to broaden the ground of common intention, if not definitely of common policy, between this country and the United States. That is all to the good, but it is no more than a beginning, and the closer the World Conference approaches the more formidable does the danger appear of its foundering in confusion and chaos, through the mere insurgence of material and psychological forces which the Governments composing it may find themselves impotent to control.
That must be avoided at any cost, and it will take almost superhuman efforts of preparation and almost inspired efforts of chairmanship to avoid it. The Con- ference will refuse to be driven but it will have to be guided. Possibly enough the Great Powers will have openly to assume the lead, as at the Peace Conference in 1919 and as at the League of Nations continually since. There are dangers in that, but there are likely to be greater dangers any other way. The programme of the Conference, as drawn up at Geneva in January, includes monetary and credit policy ; measures to raise coin, modity prices ; resumption of the movement of capital ; restrictions on international trade ; tariff and commercial treaty policy ; organization of production and trade. There is hardly an item there that is not the object of 'acute and often impassioned controveisy, not only between different countries but between different schools of thought within every country likely to be represented, with the single exception of Russia, and Russia's defiant championship of her particular principles in itself adds one more to the innumerable obstacles the Conference has to face.
In such conditions there might seem equally much to be said for postponing the Conference till some adequate preparation can be made for it and hurrying it on before the always accumulating difficulties have driven the world into complete fatalism. Actually the second is undoubtedly the wise course. Preparation for the Conference would be a not much less formidable undertaking than the Conference itself, and every calculation would be liable to be upset at any moment by the introduction of some new factor. The latest example of that, of course, is the abandonment of the gold standard in America and the sudden depreciation of one of the only two anchored currencies of importance in the world. No one will question the motives which led Mr. Roosevelt to take the steps he did, but no one can predict where those steps may lead. The dollar, which has stood at round about 3.40 to the £ since the days when the unanchored £ settled down to some- thing like stability, stood on Tuesday at 3.90, and there are those who predict a steady fall to something-like half its February and March value. There -can be no grounds for that except nerves, for America is a creditor country and ...the _demand for dollars for settlement of balances must continue. But in such matters fear of this contingency or that counts for more than the contingency itself.
However that may be, the course of the dollar is supplying sufficient reason why the superficially attractive American proposal for a tariff truce till the end of the Economic Conference has to be looked at twice and thrice. The fact is that tariffs are for the moment an issue definitely secondary to the currency problem. Till currencies are stabilized tariff agreements are largely futile, for the depreciation of an export country's currency may at any moment defeat their purpose completely. The object of inter- national trade is the exchange of goods on the basis of some generally recognized standard of value. Till such a standard is .restored there can be no assurance that the purposes aimed at by the imposition or removal of such restrictions • as tariffs and quotas may not be completely defeated as a consequence of currency vagaries. America is embarking on the experiment of controlled inflation—if it can be controlled. Its effect must be to raise prices internally, for artificially increased purchasirig power will inevitably stimulate demand. There will no. doubt in time be wider reper- cussions as the buying of commodities like rubber and tin increases. But the risk of a runaway dollar exists, and till that danger is definitely averted there remains one more uncertainty to baffle the World Conference.
Meanwhile our own assiduity in the matter of tariffs and quotas is doing little to help—except by providing a demonstration of the confusions and agitations the process. of tariff-bargaining must provoke. The principle of such negotiations as the British Government has been conducting with the Scandinavian States, Germany and Argentina is sound enough in itself. Any fractional reduction of the barriers that are bringing trade to a standstill is worth something and in the case of the Argentine it is more than fractional. But the debate on the German agreement-in the House of Commons on Monday must have satisfied the most convinced pro- tectionist that tariffs at the best are no better than an inevitable evil. As result of our plunge into Protection at the end of 1931—there were quite possibly other reasons, but that unquestionably figured largely—Germany retaliated by drastically reducing her imports of British coal. Prolonged protests and appeals to the treaty of 1924 produced no result -and so -recourse is -had to the method of tariff-biagaining. 'Germany is to raise her quota of British coal from 100,000 to 10,000 tons a Month, and British tariffs on articles of special interest to her, particularly toys, musical instruments- and safety- razor blades, are to be reduced by varying percentages—a reduction which by virtue of the most-favoured-nation clause applies automatically to such imports not from Ger- many only but from most of the world besides. -Naturally the threatened interests leap to arms. Naturally Sir Austen Chamberlain and Mr., Amery, who sit for Birmingham, protest in- the name of clarinets and cornets and toys. 'Naturally Mr. Boulton, who sits for Sheffield, protests in the name of razor-blades.. Why should they suffer in order that someone in the coal trade may get more orders ? So it is and so it must ever be. The Govern- ment secured a comfortable enough majority, but the number of- abstentions was alarming. Over the Danish agreement the farmers are as vocal as the toy and razor- blade champions in the -other case, and. they are perfectly justified-in asking why they should be penalized for the benefit of coal and steel. The best to be hoped from the World. Economic Conference is that so decisive a reaction against trade impediments will be made manifest at its sessions as to make this provocative and illogical huckstering of commodity against commodity unnecessary. The Ottawa .accords have disastrously narrowed the field of possible agreement with Scandinavia and the Argentine. They cannot, of course, be denounced by us unilaterally, but if necessary the Dominion partners as a whole must be ready to relax them wherever they stand in the way of a World Conference settlement.
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