TRACTS FOR THE TIMES

Auckland Star, Volume LXII, Issue 233, 1 October 1932, Page 8

TRACTS FOR THE TIMES

AMERICAN TARIFF. (By PRO BONO PUBLICO.) In one of tut letters to an American correspondent I asked if there was any prospect of the United States reducing the tariff. The point in my mind was, of course, the bearing of the tariff on the debfcs question. A debt can be paid in several ways, in gold, in goods or in services. As America does not want European services, and as the high tariff prevented payment in goods, there was only gold left. Now, if Europe has to pay itihe interest on the American debt in gold, she must sell goods to other people and be paid in gold, and as all the nations are keen after gold the competition has the effect of continuing the depression of prices. A moratorium is operating at present, but if payment of interest to America has to be resumed what will prevent the further decrease in prices? If America would, take payment in goods, or would reduce the tariff and admit goods on a competitive ibasis, the competition for gold would be checked and prices of commodities would tend to increase. So there was a reason for asking if the American tariff was likely to be reduced. "I don't think it at all probable," my correspondent replies. "We have had three major tariff bilk in about ten years, and every one increased the rates. That wasn't done for nothing. Our tariff is now the highest ever, and to all appearances will remain so. This year there has been some mild--protesting from bankers and* some milder from exporters., but the protests don't, amount to much. As a nation we are all for keeping out foreign goods." I had said in my letter that it would manifestly be to the advantage of the big exporting interests to have the tariff reduced, and as the most powerful industrial concerns were big exporters their influence should presumably be in favour of tariff reduction. My correspondent, referring to this view, says., "You have not got this right. Small manufacturers catering for the home market only may have inspired the SmootHawley Act, 'but it has all practical people behind it. Anyhow, what does foreign trade matter compared with home fade? We only sell 10 per cent of our production abroad, 90 per cent at home. You can't get far away from the figures, and if you ask Samuel U. States to jeopardise nine-tenths of his business—well, Samuel knows better than that." If this emphatic statement is actually the view of the American people in general, there will be no tariff reductions and therefore no acceptance of interest payments in goods. If that is the position, America is due to learn something about international trade and finance in the near future.