The Auckland Star: WITH WHICH ARE INCORPORATED. The Evening News, Morning News and The Echo. THE NEW FREE TRADE.

Auckland Star, Volume LVII, Issue 250, 21 October 1926, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED. The Evening News, Morning News and The Echo.

THE NEW FREE TRADE.

For the cause that tacks assistance. For the wrong that needs resistance, For the future in the distance, And the good that we can do.

THURSDAY, OCTOBER 21, 1926.

In considering the manifesto in favour of world-wide Free Trade, just issued by an international group of bankers and financiers, some attention should be given to the source and origin of this appeal for "the establishment of economic freedom." It is stated in New York that this movement originated last year with a number of British bankers; and it is thus evident that these proposals emanate from the home of Free Trade, and that they represent chiefly the point of view of British finance and capitalism.

Regarded from this point of view the tone and character of the manifesto at once becomes intelligible. British capitalists and financiers, as well as British manufacturers, realise that it will be extremely difficult to ensure Britain's recovery from the effects of the war unless and' until her goods can be sold more largely in foreign markets. Therefore they advocate the abolition of protectionist duties abroad. At the same time because capital is now international in its activities—that is to say, capital moves all over the world with great rapidity, following the lure 01 high interest and large profits—it is not difficult to induce bankers and financiers to accept the view that Customs duties and protective tariffs are serious obstacles to the progress and prosperity of the world at large.

It is because modern finance is thus largely international in character that most bankers and financiers are disposed to support Free Trade. But on the otaer hand Protection is a national policy. That is to say, it is based upon the conviction that every nation-State must build up and promote industries within its own borders to enable it to pay its own way and support its own population; and that is the chief reason for the ineradicable antagonism between the two types of fiscal policy. There is nothing new in this, however, and those responsible for this manifesto have apparently devised no novel or original arguments, except post-war conditions, to justify their appeal for the abolition of the system under which all the great industries of the modern world have grown up.

It must never be forgotten that Protection is a system which is considered to have justified itself by its success in the experience of every nation-State in modern times. Britain's adoption of Free Trade in the middle of last century has not induced any other country to abandon Protection, and it was under a system of the most rigid Protection that Britain herself had built up the industries which a hundred years ago gave her virtual control of the world markets for manufactured goods. Since Britain adopted Free Trade every other country has, under Protectionist tariffs, made itself to some extent self-supporting; and long before the war came British manufacturers were finding it increasingly difficult to hold their own either in the British market or in foreign markets against their younger competitors.

What has happened since the war is simply an aggravation of the difficulties that necessarily confront any State which endeavours to maintain "the open door" in a world of Protectionists. The so-called "Balkanisation" of Europe;—the establishment of a number of new independent States with political frontiers, and consequently with Customs tariffs of their own—has naturally complicated the problem; and undoubtedly Britain must find it harder to sell her goods in European markets, and especially in these newly-formed countries, than it was before the war.

These considerations have influenced British bankers and manufacturers in setting on foot this movement for Free Trade, though it need not be supposed that their motives are entirely interested. Moreover, they seem to have obtained a good deal of support in Europe, and even some in the United States. The remedy proposed is> practically universal j Free Trade. That has been emphasised since the war in various ways by such advocates of the international outlook as Mr. J. M. Keynes, Mr. Lowes Dickenson and Mr. Norman Angell. It may be possible to do something to lower tariff barriers in Europe and thereby produce a greater flow of trade, but it will be very difficult to persuade countries Protectionist by experience and conviction that they can safely cast aside the national policy which has enabled them to build up the industries that they possess and to replace it by a vaguely cosmopolitan system which takes no thought of national independence, but leaves to the risks and chances of unrestricted competition the employment of the wage earners and the prosperity of the people.