TRADE AND INDUSTRY

Evening Post, Volume CIV, Issue 4, 5 July 1922, Page 12

TRADE AND INDUSTRY

EFFECTS OF EXCESSIVE TAXATION NO TRADE BOOM YET MOVEMENT IN THE RIGHT DIRECTION. - , (PROM OUR OWN CORRESPONDENT.) LONDON, 12th May. ;"A rational optimism is to be recommended as a habit of mind, but we must not allow it to warp our judgment orobscura the realities of the position," said the Rt. Hon. R. M'Kenna, who, in proposing the toast of "The Worsted; Spinners' Federation and the Textile Industries of the West Riding," at the djiiner o£ the federation in Bradford, dealt at length with trade -prospects. There was no short cut,, lie said, _to national prosperity, not even by making Germany pay. I£ we looked at one or two outward and visible indications of trade, the optimist seemod to have a. pretty difficult task to-day. Seventeen hundred thousand, unemployed were not usually the forerunners of a trade boom. Unemployment &o vastly in excess of the normal showed what a long way wo had to go. Again, cheap money euch as we had now was a. sure sign of general trade inactivity. Stock Exchange activity must not be confounded with trade revival. Mr. M'Kenna explained that movements in bank advances, in internal bills, in bank acceptances, mark the. very earliest stages .in a trade revival, and he asked: "Has there been any ! recent movement in these figures? Are manufacturers and; merchants requiring more money to finance theii operations, \ and is their turnover more rajjid? Are there more internal trade bills coming to j the banks for discount? Is there a greater demand for bank acceptances to j finance foreign trade, which, though it i pass only between two foreign countries, still provides freights for British ships, premiums for British insurance ■ offices, and profits for British banks? j If we take our estimate of the. future from any one of these evidences of trade, 'we find in each case some ground in support of the opinion that the volume is increasing. But they afford no'indication of a coming trade boom. The most that can. be said is that there is j some movement, and, though the pace may disappoint us, it is in the right direction. . ' . STERILISING EFFECT OF HEAVY TAXATION. " There are certain fundamental conditions which are indispensable to any Teal and lasting trade revival. Notwithstanding recent remissions of taxation, I believe that the remaining burden is heavier than can be borne, consistently with the prosperous development of our trade. If I thought that the present rate of income tax and super tax merely operated to force an inconvenient economy upon the taxpayer; however troublesome I might find it, I should not think it my duty to call attention to it. But it does much more than this. Apart from its moral effect, in disheartening the trader and discouraging enterprise, it prevents that growth of capital wliich is indispensable to all progressive business. The.' reserve which every good business man aims at building; up is eaten into, and the power to provide for future development is lost. I have seen too marfy balance-sheets not to know the sterilising part which excessive taxation plays- We cannot hope for a healthy trade revival up to a level which wo should have described as good trade before the war, until % a rigid economy in public expenditure we are in a position to make a further substantial reduction in our taxation. There is another condition indispensable to a real trade revival. We cannot recover our old level of welt-being until our foreign markets are restored. A peaceful settlement in Europe is of vital importance t^ us, and I make no apology for put- : ting our trade interests in the forefront of our foreign policy.

THE TEXTILE INDUSTRY. I "The-improvement in export trade, as) shown in the Board of Trade returns,"' Mr. M'Kennu went on, " was very welcome, but export trade figures were considerably swelled *by the loans to our Dominions and colonies, and to foreign countries, which credits were being expended in the purchase of British goods. We could not continue indefinitely our trade on those terms, i Except to a small extent, this country does not produce its raw material. The bulk we import fiwra abroad, We manufaofcure it here, and, after clothing our own population, we have a large surplus of the finished article for export. Thus we bring wool from Aastralia, New Zealand, South Africa, and elsewhere, manufacture it into cloth, and then export this cloth all over the world, including the very countries from which the wool has come, notwithstanding that in many cases high tariff barriers are raised against its entry. Is it too much jto say that these facts seem to point to the concluaion that the people engaged in the Yorkshire textile industry possess some special gifts of manufacture, organisation, and administration?" "But the testimony which this indus-i try bears to British qualities does not | emd here. Yorkshire jnanfactuxers and ditributors could not have achieved this great. success if it had hot been that th» gondug of oui people at the other end of I th- earth had produced types of wool vastly superior to those of a- century ago. There has been a remarkable Imperial cooperation in securing a wonderful result, Australian sheep-breederr and Yorkshire manufacturers working togethei in harmony to accomplish oni> ami. If anyone ! be'tempted in bad times to despair about the future of the Empire I could suggest no better- tonic than a study of the de- ■ velopment of clothmaking in the last hundred years within thq circle of the British Empire. REMARKABLE CLOTH FIGURES. "Trade statistics of the last pre-war year, 1913, show that we imported for ! homo manufacture £24,000,000 worth of j wool, mostly from our own Dominions, ! and that after clothing our own popula- j I tior we exported about £36,000,000 worth of woollen and worsted yarns and manufactures. During the wax we were able to, clothe not only our own Navy and j Army, but to a considerable extent also the armies of "our Allies. When the j Armistice came, the woollen textile in- ; dustry was prompt to re-establish itself in thi markets of the world. Its exports reached the astonishing figure in 1919 of £96,000,000, and in 1920 of £135,000,000. Those figures were not altogether an evidence of healthy growth; they Represented in part inflated and very short-lived values. But they give a remarkable proof of the elasticity of your manufacturing and trading' organisation. The figures for last year are not so cheerful. British exports of wool products in that yoax of depression fell to £55,000,000, but even that was a comforting total compared, with the figures of some other industries. "If 1 am asked whether this total ot exports represents .the best that was possible, I fcav that I should have to answer iv the negative. ■ " ONLY ONE WAY. "Taking a general survey, I think that :the manufacture of .worsteds andj yipok

lens in Great Britain to-day has a fair prospect of a return to sound prosperity, provided that it takes with -courage the path of hard work. So.far.no country in the world has been able to challenge successfully either- your skill in spinning and weaving or your business organisation. We may therefore reasonably hope that the industry will pass through the present crisis as successfully as it passed through the^ crisis which followed the Napoleonic wars. But it -will not be along any easy path. On. that note I may well conclude as I began. There is no ca.use for despair, either as regards the future of your industry, or the future of British industry generally, if we bub reassert our old national character for steady and sustained effort, and give up the delusive hope that industrial salvation can come toy any other -way than by good work."