DEBTS, TARIFFS, AND TRADE

Evening Post, Volume CII, Issue 41, 17 August 1921, Page 4

DEBTS, TARIFFS, AND TRADE

-»i Some remarks by, Mr. Wilford touch upon the suicidal tendency of a foreign trade that is carried on by a heavily protected country assisted (or handicapped?) by? a favourable rate of exchange. Mr. Wilford's figures tend to confirm the impression that America, owing to the apparent advantages of her trading position, is losing external trade. Though America's post-war experience. is still an unfinished chapter, it raises, prima facie, the old principle that trade is not only exchange, but must be, in the average, profitable exchange for both parties, or it will not survive. If a self - contained, gold - attracting country exports goods, but refuses to import their equivalent, and thus, by tariff and exchange rate, makes it difficult or impossible for the other country to render payment, the debtor country becomes practically insolvent; , and that is the condition to which' Mr. Hoover refers when he speaks of the bankruptcy of Europe. Insofar as the. exchange rate is an automatic curtailment of the operations of a warbankrupt, it may be necessary.% But when the debtor suffers the creditor w,ill not remain^unhurt.

§Some of the debtor countries of Europe have become indebted by economic process; others have become indebted by economic process plus the penalty of defeat. It is not in the interest of the creditor country to fix, either by economic measures (tariff, embargo, exchange rate, etc.) or by peace treaty, a liability beyond the capacity of the debtor country to' discharge; and the : creditor that transgresses in this respect will hardly escape the economic consequences of his transgression. At the present -time the economic working of exchange rate,s, tariffs (e.g., America's protective tariff and Britain's proposed protection of "key industries "), and treaty liabilities is under test—a test that should add much to: the world's stock of experience. Undoubtedly the tendency so far is to emphasise the economic oneness of highly industrialised countries, and the extreme difficulty of 'serving one's self while disserving one's neighbour. Such a generalisation of course, carries with it exceptions, and many Americans who are now disposed towards an abatement of protection are nevertheless staunch on the principle that, in their younger days, American industries could not have been built up without it. • ■ ]

In Britain the Liberal freetraders are showing increased fighting power, though weighted with their own acquiescence in the Paris Economic Congress. The newer features of the world-problem are worthy of the attention of any country that' is preparirfg, as New Zealand is, to recast her tariff in! accord with post-war conditions of primary and secondary industry, financial tightness, and increased national debt and taxation.