TARIFF, AND A CHANGE OF HEART

Evening Post, Volume CXV, Issue 11, 14 January 1933, Page 10

TARIFF, AND A CHANGE OF HEART

The people of the United States are .now being told daily by their own business men what they were , told years and years ago by Sir George Paish and others—that they cannot expect to sell abroad unless they buy from abroad. Some of the few tariff-mad Americans who took notice of Sir George Paish replied: "Very well, we shall neither sell abroad nor buy abroad." But they did not-proceed to organise for that proud self-containment, as is proved by the fact that loss of foreign trade has so badly upset them. Their excess of exports was 1037 million dollars in 1928, converted into an 1 excess of imports of 174 million dollars in the first ten months of 1932. This misfortune to United States exporters, the result of tariff-exclusion of the goods, of other countries' ex- | porters, who are also debtors to the j United States, is coincident with. 11$ million unemployed (Mr. Green's estimate) and is curable only by reducing the United States tariff. Such !at any rate is the finding of Dr. B. IM. Anderson in the "Chase Economic Bulletin." To say that you need a low tariff, not a high tariff, in order to export—to even say that a low tariff, not a high tariff, is going to help your, own manufacturers both in the internal market and abroad—is heresy -to many American protectionists. Yet that principle is connoted by any policy except an absolute self-containment policy. If you are to have customers oversea, you must, allow them to trade; if you are to have debtors oversea, you must allow them to pay in goods. "I find a growing body of United States manufacturers," writes Dr. Anderson, "who are convinced of the general principle that we cannot sell unless we buy, and who are convinced that we must moderate our tariff policy so as to receive more imports if we are to restore our export trade.". The great rediscovery that the import creates the credit that buys the export is accompanied with a fear that, under, a lower United States tariff, a flood of imports would undersell United States manufactures in their. own market, would close United States factories, and would increase the 11-J million unemployed—which aggravated unemployment, growing like a snowball, would destroy still more of the internal purchasing power and thus open the United States market still more to the cheap import. Dr. Anderson paints a quite different picture. He sees the lower tariff on imports at once increasing the purchasing power of the foreigner who sends goods to the United States,; he sees that foreigner not only paying American debts out of goods sent to

America, but using the balance of payment-for-his-goods in order to buy America's goods; hence creating at once a revived export of American goods which improves the American internal market for other American goods, including, of course, American manufactures. Foreign customers can send goods hei'e, sell them, turn over part of the dollars to their creditors, and uso the rest of the dollars in buying our export goods. This is necessary to lift the buying power of American agricultural and our other great, depressed export interests, so that these, in turn, can make a good domestic market for.those of us who do not ■ depend on export trade but rely primarily -' upon the domestic market. If the question be asked: "Which will come first, the inrush of- cheap foreign manufactures,, or the outrush of American goods that foreigners at last can buy?"— Dr. Anderson answers emphatically that the rush of imports into America will not come first. His reasoning on this point is interesting. In the first place, a projected rise in a tariff rushes imports, but a projected fall does not. In "a downward revision, the tendency for importers; is to hold back in order to get the benefit of the lower rates." Again, it is easier for Europe to cable an order for standardised wheat or cotton or copper than. for America to cable an order "for finished manufactures where specifications of quality are less exact." Here is a maxim New Zealand will be interested in: Cables work faster than ships, and prices of foods and raw materials move faster than prices of manufactured goods. . . .A very moderate change in the attitude of markets toward foods and raw materials means a radical swing in food and raw material prices. Modest increase in activity in the manufacturing centres means large changes in raw.material prices. The further goods are away from the consumer, the more radical are the swings up and down in their prices. On this line of reasoning he argues that the stimulus of revived foreign trade will outweigh in the internal market any slackening of factory work due to fear of imports. "There are very few indeed of our manufacturers who; would not, almost immediately, 'be doing better business if we had a carefully-considered reduction of our tariff along these lines."