World Commercial Centre
By OSCAR HOBSON
The shipping figures speak eloquently of the tremendous present importance of the Port of London. The tonnage of shipping which used the port last year exceeded the pre-war tonnage of the whole of the mercan- tile fleets of the world. Every merchant ship afloat in 1939 might have entered and left and been loaded and unloaded in the Port of London and the port would still have been less busy than it was in fact. • One more often hears London described as a centre of _finance than as a centre of commerce. Yet, of course, commerce comes first. The goods must be there and avail- able for exchange before all the refinements and subtleties of ' finance ' come into the picture. There must be goods and there must be markets in which they can be bought and sold before the means of paying for them and moving and insuring and storing' them are called into play.
In London the famous produce and com- modity markets, in which the whole world bought and sold wheat, rubber, tea, cocoa, coffee, sugar, wool, shellac, copper, tin, lead, zinc and a host of other materials, were dosed at the beginning of the war. They were closed because 'for the duration' the Government resorted to 'bulk buying' of theses commodities from the countries in which they were produced. Bulk buying is unavoidable in wartime when the Government must, perforce, take complete control over all shipfling and the goods which the ships are to carry. But in peacetime it has grave dis- advantages, for bulk buying puts bulk first and quality a very poor second. If the Government had continued its wartime monopoly of the buying and selling of basic commodities the result would have been disastrous for London. It would have been impossible for her to provide overseas customers as she had always done with goods of the precise grades and qualities which they needed. The technical skill and knowledge which in former days had been applied to selecting and grading and storing and moving commodities to suit the exact requirements of purchasers all over the world would have gone to waste and ultimately disappeared. The substantial profits of this marketing business and the multifarious services which go with it would have been lost.
The continuance of the Government bulk- buying monopoly would have suited the extremer 'planning' doctrines which found favour at the end of the war, but, fortunately, saner counsels prevailed. The right of private trading in commodities has been restored and the free wholesale markets of London (and Liverpool) have been reopened. The process was indeed begun by the Labour Governments. The London rubber market was reopened in 1947. Dealings in tin were resumed on the London Metal Exchange in 1947. The London tea auctions began again, in April, 1951, the raw wool auctions in 1946. All these are sterling commodities' of which main sources of supply are situated in the sterling area, and for the purchase of which scarce dollars were not needed. Later when the Conservative Government came in, all or almost all the other com- modities traditionally dealt in in London were released from control. The London Metal Exchange now deals again in copper, lead and zinc, as well as in tin. The sugar market functions again. On the famous Baltic Exchange wheat, barley and oats can now again be bought and sold by the ship- load, and ships—and now aircraft—can be chartered for the carriage of freight the world over.
Those important (and, to the layman. mysterious) institutions, the futures ' or 'terminal' markets, are once more working—they covet the non-ferrous metals, cocoa, shellac, maize, barley, oats (but not yet wheat or sugar) and (new since the war) wool tops. They are a most valuable adjunct to a commercial centre for, contrary to the Socialist doctrine which condemns them as mere gambling casinos, the effect of futures dealing is to damp down fluctuations in prices and to provide producers. dealers and manufacturers with a means of protecting them- selves against loss due to such fluctuations.
The commodity markets of London are, with very few excep- tions, working agaip. It may be that as yet they are not working with quite their are-war efficiency. It was London's boast before the war that there, if nowhere else, could a shipload of an odd commodity or a commodity of sub-standard or unusual quality always find a market. That state of affairs may not yet have been fully restored. But it is only a matter of time before it will be. No other commercial centre has shown any real sign of ousting London from her. premier position—not even New York. There are various reasons for that. The pull of the dollar on the world's produce, it might be thought, would prove irresistible. And so doubtless it would have had the world been better stocked with dollars. Rut great areas of the world have been even worse affected by the dollar shortage than Great Britain. In the kingdom of the blind the one-eyed man is king. Despite the ' softness ' of sterling as a monetary medium of exchange, half the international' trade of the world has continued to be 'financed' in sterling, because sterling with all its imperfections—and exchange control, despite recent relaxation, is a serious imperfection—is a viable currency for international commerce. It is a viable currency, above all else, because British banks still understand the business of arranging the payment for international transactions, as the banks of no other country do. British insurance offices, too, Lloyd's and the companies, understand the business of marine —and air—insurance as the offices of no other country do. Signal proof of that was given a few years ago when the great liner United States sailed on her maiden voyage carrying $17 million of insurance written by Lloyd's and only $14 million by American underwriters.
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