The Dominion. FRIDAY, OCTOBER 29, 1926. FREE TRADE OR PROTECTION?

Dominion, Volume 20, Issue 29, 29 October 1926, Page 8

The Dominion. FRIDAY, OCTOBER 29, 1926. FREE TRADE OR PROTECTION?

A manifesto broadcasted by prominent. British. European, and United States bankers and business men in favour of free trade as “the best hope of restoring the world’s commerce and credit,’’ would at any time command widespread interest. At this particular period of economic unrest and insecurity its appeal might very well be much stronger. So far from agreeing with the proposition, however, the president of the British National Union of Manufacturers (Mr. George Terrell, M.P.) is of the opinion that “preparations should be made to reverse British fiscal policy at the next elections.’’ The great fiscal controversy has been revived in what is likely to be an acute form.

The signatories to the manifesto include men of unimpeachable standing in banking and business, men who would not hurriedly commit themselves to a proposal involving tremendous reactions. The suggestion would even commend itself to Mr. lerrell if it led to all-round free trade, but he is convinced that it would have no chance of succeeding. In the present condition of things he is right. Protection in some form or other goes back into the mists of antiquity. Free trade was a system of traffic which developed in Great Britain from a set of circumstances peculiar to the times, and highly favourable to its successful operation, but which does not exist now. It may be interesting to dwell upon this, for it was a development which depended to some extent upon Britain’s trade with her then young colonies, but to a very large extent upon what is known as Britain’s industrial revolution.

The vast and rapidly growing British colonial territories opened up great possibilities for the establishment of new markets, but, here is the point: these markets were at that time the exclusive preserves of the British traders. The development of the British coalfields, the invention of steam, and the concentration of industrial activities in specialised manufacturing centres created an increasing demand for raw materials, the Home and colonial supply of which was then inadequate. Foreign manufacturing competition had not developed. The open-door policy was both necessary and practicable. So free trade arrived.

The case is different to-day. Industrial activity in all countries, and trade competition between all countries, has become intense. Free trade all round under these conditions would still be possible if the conditions of production were universally similar. But they are not. Wages and conditions of living arc different; taxation is different; manifold influences, in short, which react directly or indirectly upon industry, are at variance in the competing countries. Obviously some measure of protection is necessary for industries and trade threatened by the cut-price competition of outsiders. In Great Britain (here has been a steadily increasing body of opinion in favour of a reversion to the principle of protection. The first official recognition of the necessity for this was the Safeguarding of Industries Act of 1919, which set out two ruling principles. The first was that British “key” industries, considered to be vital to the political security or industrial well-being of the country and the Empire, must be fostered and protected. The second principle set out to safeguard any industry adversely affected by dumping or by the abnormal advantage derived by a foreign competitor working' under a depreciated currency in relation to British sterling. This second provision has since lapsed, but its principle has been embodied in a subsequent measure, the conditions of which, however, place upon the manufacturer the onus of establishing his case for protection by a different and more searching process, one object of which is to test the efficiency of his enterprise, and another to safeguard the consumer. The fact that Britain to-day has to fight for foreign trade against tariff barriers, while facilitating access for foreign goods to come into her own markets under favourable conditions, is the strongest argument in favour of protection. The pressure of threatened manufacturing interests, together with the connoted problem of unemployment, are factors which must inevitably bring the whole question to an issue.