Evening Post. TUESDAY, JANUARY 17, 1933. DANGERS OF ECONOMIC NATIONALISM

Evening Post, Volume CXV, Issue 13, 17 January 1933, Page 6

Evening Post. TUESDAY, JANUARY 17, 1933. DANGERS OF ECONOMIC NATIONALISM

In the message to the Conservative candidate at the Liverpool byelection which was summarised in a cabled report on Saturday, Mr. Ramsay Mac Donald emphasised the importance and urgency of the World Economic Conference and of the settlement of war debts as one of the most fundamental of its tasks. Lausanne, he said,, not only began the work,'but showed how it could be pursued to a successful issue. The Government was now engaged in an endeavour to reach a settlement of the debt to the .United States, a matter which, in yiew/of the urgency of world conditions and the carrying out of the Lausanne decisions, admitted of no' delay. The "financial paralysis," which the Young Plan Advisory Committee de-, dared in December, 1931, to be creeping over the world from Germany, and to be incurable without an adjustment of reparations, and war debts, was in the Committee's opinion so. dangerous that it called upon the Governments concerned to treat it as a matter:of urgency. After more than six months' delay the European Governments took the necessary action regarding reparations at Lausanne in Julyj The lapse of another six months finds their decision still inoperative because the: United States, is not yet ready to deal with the war debts problem upon which the other depends. But, slow though the process has been and still is^ some advance has already resulted froni the American elections. President Hoover's acceptance of the invitation to the World Economic *" Conference was conditioned by the exclusion from its agenda, of war debts and tariffs —the two issues that Britain regards as the most important of all., What the Democratic regime will say about: the tariff remains to be seen, but in the. by no means sanguine article which we reproduced from the "Daily Mail" on Thursday, Mr. Boothby, M.P., writing apparently in America, spoke confidently on one point Of one thing, ho said, there can be no doubt. The United States is now prepared to take the forthcoming World: Economic Conference very seriously indeed, and to include both war debts and monetary policy in the agenda. • - \ In a weighty, lucid,.and dispassionate article on "The Task of the World Economic Conference," which appears in the December number of the "Round Table," the fundamental cause of the world's malady is as-. signed to politics. At bottom, says the writer, the ] causes of the crisis are not economic —njot even monetary—but political. The crisis springs directly from the war of 1914-18 and from the post-war policy- (the antithesis of mutual selfhelp) pursued by the leading nations. It is in its origin essentially a political crisis. ■■".■' Under the: conditions of peace the' operations of finance and business are compelled more and more to transcend national boundaries, and a necessary incident of the process is the development of a delicate and complex system of international credit and of international financial and economical relations. Under the normal changes of circumstance and management such a, system will have its ups and downs. It will without question bo smashed —as it has been smashed—by great J wars and enduring national animosities, j It is then, that, as a climax of- misfortune, the instability resulting.from the ' rupture of all these ties forces each i nation back on itself. Its neighbours appear to be the culprits and, in the attempt of each at self-defence, the international mechanism -is still fur- ', ther damaged' and. the economic and financial world thrust still further down into chaos. "We have, in fact, reached the moment when we must all make our choice. If we cannot forgo the luxury of national hatreds, national distrusts, and selfishness, then we must limit pur prosperity and our standard of living to that which each nation, living more or less to itself, can achieve. If we wish to secure the far higher standard which should bo within our reach we must all live at peace. . . ■

Among the consequences of the crisis special mention is made, with illustration from relevant figures, of the unprecedented fall in industrial production^ the enormous reduction of international trade, the fall in wholesale prices, the resulting aggravation of the burden of both internal and external indebtedness in every country, and the destruction of most of the international monetary systems based on the gold standard. The last item is, of course, associated with the extraordinary maldistribution of gold reserves., which is illustrated by the fact that

at 31st March, 1932, the United' States and Prance held 6,995,000,000 dollars of. gold in their Central Banks out of total Central Bank gold reserves in the world of 11,236,000,000 dollars.

Of special concern to New Zealand is one item in the list of measures by which the nations in the'endeavour to shelter themselves from the economic storm have increased the difficulties of others and postponed the recovery which the world must seek as a unit and not in warring sections.

The ground is littered, says the "Hound Table". jvTiters, jvith. "stand-

still agreements," exchange controls, increased tariff barriers, contingent and quota systems, import prohibitions, export bonuses, clearing and barter systems, etc., etc. However inevitable it is that nations should have been driven down, this road to economic nationalism by the complete collapse of equilibrium, international trade must necessarily suffer from every one of such measures.

At Ottawa the New Zealand delegation, following Mr. Baldwin's wise lead, set its face against the economic nationalism of which he took much the same view as the "Round Table's" contributor, and one of the results is the Agreement under which we, and our farmers in particular, have received much from Britain and made some slight concessions in return. Whatever the Farmers' Union Conference may decide, is it possible that any member of that delegation, or of the Government, or of the p'artywhich approved the Agreement, will support a manipulation of the exchange rate which will take all those concessions back a score-of times over by what will be in effect a penal measure against British trade? We have left ourselves no space to deal with the constructive part of [ the "Round Table's" article beyond indicating its general character. There is, it says, no specific remedy for the confusion into which the world has been thrown. Yet there is' no doubt in which direction Telief must be sought. It is by a movement toward the liberation of private enterj prise, industry, and commerce. That, indeed, is not the direction in which the world has been travelling since the war, nor in ' which democracies have recently looked for a solutiondemocracies' like short-cuts and simple remedies. The writer has no short-cut or simple remedy to propose, and reminds those who expect to see the Governments of the world combine to take charge of its finances and its commerce and run them that in those matters "where Governments take a step forward, private enterprise takes two steps backwards," and that V world plan would involve "a net of rigidities and controls which will finally destroy all progress and initiative." In the opinion of the "Round Table" writer the main problems of the World Economic and Monetary Conference are as follows:— (1) How to secure a rise in the wholesale prices of world commodities. (2) How to adjust the dislocation between the prices of raw materials and food and those of manufactured articles. '

(3). How to lighten, the burden of indebtedness, internal and external, including war debts.

(4) How tq solve the problem of short term debts.

(5) How to diminish tariffs, and abolish exchange controls, clearing schemes, quotas, prohibitions, ©tc. (6) How to restore a sound international monetary standard..

And he considers that in handling these problems "the sole preoccupation of the Conference should be, What can Governments do to free .these brakes, sufficiently to release the wheels of private industry and commerce?" • /