TARIFF PROSPECTS

Evening Post, Volume CXII, Issue 102, 27 October 1931, Page 9

TARIFF PROSPECTS

SURVEY OF SITUATION CHANGING FACTORS

' Out of the tangled issues oil the British General Election two facts emerge; the country is expected to return a Government pledged to safety first mea- ; sures and predominantly Conservative, and the Conservatives are likely to find ■ that the situation is such that a tariff is 1 needed. It is true that party leaders have , made it clear that no general mandate may be claimed for marked departure 1 from. Britain's present fiscal policy, but lit is also clear that Mr. Baldwin has ' been hedging on the point. No Gov- [ ornment, lie said, was able to impose a "permanent tariff," but he was prepared to examine the use of the tariff * with the utmost care and impartiality 'in the light of all the circumstances. It \is clear that "the light of all the circumstances" may easily lead a safe Conservative Government to the conclusion that what the country needs is alteration in tariff policy. ! Support for this view may be gained - from Mr. Winston Churchill, who, in an article writton for American consumption and published within a fort- ■ night of the decision to hold a General ! Election, declared "the Conservative ' Parly, with wide and growing measures lof agreement in both other parties, is whole-heartedly resolved upon the general return of Great Britain to protection. They believe that the immediate ' setting up of a tariff will stimulate do- ' mestic industry, will restore more bone and structure to the national life, and may also bo used as a means of unifying and consolidating tho Empire. They were looking hopefully forward to receiving the strong support of the electorate upon this issue at an early elec- \ tion. Now they find themselves in the embarrassing and, indeed, painful position of being confined only to the carrying through of austere measures of taxation—a task at once sterile and inevitably unpopular. . . It may be that retrenchment and severe additions to the Liberal Party, yielding to the strong tides of national opinion in ' which their own existence might be \ easily engulfed, will allow itself to be ' converted to or will accept protection. lln that case, the emergency Government, with some changes in its personnel, might produce an emergency \ tariff." '. CHANGING VIEWS. It is only too obvious that tho tern' per of the British people is changing. 1 The recent declaration of the Federa- " tion of British Industries that a tariff ' was necessary might be taken, to re- ; present self-interest, but there have [ been other indications of a disposition [to question the policy of free trade. In 1 June of last year the Council of the 1 Trades Union Congress advocated an " Imperial policy which meant the aban- \ donment of free trade; only 3.9 per cent, of tho membership of the Federation of British Industries voted last ' October for tho retention of the present tariff policy, while in July, 1930, " the Manchester Chamber of Commerce [ itself revealed the same tendency. A [ total of 1736 votes was given for pro- ' teetion and only 607 for free trade. The Bankers' Manifesto, so widely publicised, even though repudiated by leading figures in tho banking world, showed that tho protectionist idea was penetrating the city itself. Mr. J. M. Keynes early this year launched proposals for a revenue tariff, anl the word "dumping" has crept into common use in a section of tho Press. "The • younger generation, when it is not actually protectionist is still interventionist in mentality, which indicates a significant change in the spirit of tho people," declared M. Andre Siegfried in his recent book on Britain. "The peoplo have lost their old orthodox i ideas. They do not seem hostile to free trade, yet one could not call them i convinced, active Liberals. . . The political atmosphere is now completely transformed, for it is difficult to arouse the enthusiasm of a British audience by talking free trade, as it is no longer a question of faith." The change is not without precedent, for tho introduction of tho MacKcnna duties (and by a Lord Chancellor!) has always been held significant. Thu

duties were .■justified as the present proposals are justified, by reference to a state of emergency. Th© stir which was created over the dye-stuffs, industry this year when it was announced that existing protection would not be renewed after 1932, indicated that the "state of emergency" is not considered likely to jjuss. THE EXPORT PROBLEM. Primarily, of course, those who fear the introduction of a tariff in Britain do so not for reasons of sentiment, or because thiy fear interference with the free flow of goods. They regret the possibility of -the step because they hold it will, be an admission of defeat. The introduction of a tariff, from the point of view of the workers, would mean a reduction in real wages and, while raising prices on the lionic market, would mean that more would go to pro- ; fits and less in wages. The policy which would be of utmost benefit to Britain is one of expansion, an alteration of conditions in the country so as to enable her products to compete with her rivals in the world market. Of the quality of British labour there is no need to fear. British output per capita was 10 per cent, greater in 1930 than it was in 1924. Complete organisation of the labour ranks has made it possible for new methods to penetrate from top to bottom on the structure in a small space of time. But organisation and equipment in the coal and textile industries, to cite outstanding instances, have remained short of what is needed. To-day, for the latest ideas in methods of production, foreign observers no longer go to Britain," they ' go to the United States. '. In the world market, and not merely the domestic market —that is where the ground has been lost. Britain's principal industries have been exporting from 40 per cent, to 80 per cent, of their output. In 1930, imports of cotton goods were only 5 per cent, of the home consumption, and this year have fallen below that percentage. But in certain other directions Britain haa come to rely more on imported manufactures, in iron and steel, in electrical equipment, in paper and cardboard. Probably but for the defeat of the Conservative Government, these industries would have been given protection years ago. In 1913 Britain imported raw materials and articles wholly or mainly unmanufactured valued at £217,000,000. ,Her import of manufactures was £171,000,000, a total of £378,000,000. Her imports of food and 1 drink'stood at £274,000,000. In 1924, imports of articles wholly or mainly 1 unmanufactured were £185,000,000 (90 1 per cent, of the 1913 figures), imports 'of manufactures were £180,000,000 1 (105 per cent, of 1913 figures), and her imports of food and drink stood at ' £349,000,000 (125 per cent, of 1913 figures). I PALLING FIGURES. At the same time, exports had fallen t from £525,000,000 to £396,000,000, a : drop of 24 per cent., and re-exports i from £109,000,000 to £99,000,000, a I drop of almost 10 per cent. These - figures have been converted to th/ basis i of 1913 average prices, but comparison sin later years becomes increasingly difficult, because of changing currency - levels, and also because of the fact that I trade with the Irish Free State is now • recorded as external trade. But in : 1927, still taking the 1913 price basis, imports of articles wholly or , mainly unmanufactured were 101 per cent, of what they had been in 1913, imports of manufactures were 134 per cent, of what they had been, and imports of foodstuffs 127 per cent, of the 1913 figures. Exports of British products in 1927 were 77 per cent, of tho 1913 average, and re-exports 81 per cent. The size of the totals of imports of food, drink, and tobacco is significant, and speaks eloquently of one reason for Britain's position. "Notoriously our • competitive power is diminished by our i high standard of living," says Mr.j ■ ELeynes. Towards maintaining this ■ standard the unemployment funds have i contributed, from the standard a tariff !• will subtract. But there aro other i factors which aro colouring the present outlook in Britain. Tho experience of san adverse trado balance is nothing > new. Britain has for many years im- • ported more than she exported: she has ; balanced her national accounts by i means of revenue from capital which • she has lent abroad, and of her profits i from shipping and banking, both of ■ which services she has performed for ! the world. But the world crisis has ' served to accentuate the previously ; purely British problem. Shipping pro- ■ fits are now questionable, banking pro- > fits have fallen with the fall in trade, ■ earnings of foreign capital are problemi atic and risky. These the factors which are combining to put the test on L Britain, and for this reason it is rei grettable that the''election has come ■ about in such a way that no clear • mandate is to be given on the subject [ of tariff policy, and that a strong Coni servative Government yet may be g]aei ed in the position where it will be abj^ s to adopt a fiscal policy (justified by • the word "emergency") which may be ■ no solution and against the conviction > of a large section of the voters.