WORLD PROBLEMS

Evening Post, Volume CXVII, Issue 95, 23 April 1934, Page 9

WORLD PROBLEMS

ECONOMIC ISOLATION

PLANNING FOR RECIPROCITY

LEAD. BY BRITAIN

(From "The Post's" Representative.)

LONDON, March 15. In a series of articles in "The

Times," a correspondent considers the

important problems arising out of the pursuit of national self-sufficiency. Ho shows lion' hopeless it is in present circumstances to expect general international co-operation, and suggests that j if there is to bo any reversal of the j the- present tendency towards economic isolation, the only practicable method is by agreements leading to lliu formation of groups of countries willing to promote tho freer exchange between one another of their complementary products, and ready also, in order to I ' promote that object, to abstain from artificial encouragement of industries which they cannot maintain except at serious economic loss. The writer shows that the exaggerated forms of agrarian protection in European countries are not solely due to a desire to protect local production. "Fiscal or monetary defence against ■ the consequences of the depression has played an important part," ho says. "These measures have been used to improve national balances of .trade and payments or as a form of insulation against tho catastrophic fall in commodity prices. In certain European countries the protection ef agriculture is closely connected with unemployment, since farmers are required to engage a given number of men for every acre cultivated. Such men may be paid a mere subsistence wage, and some may ;be of little value to the farmer,_ but. . their maintenance is made; a direct c.liiiro-o on tho costs of agricultural pradnet ion. In both Western and Eastern Europe political events since the war lirve K'd Governments to attach peculiar significance "to tlio peasant. He 'is regarded as the backbone of the State" both as a defence against C.oniinunism and as a reservoir of virile man power in case of war. This has led tho Continental politician to reward any economic measure as' justified if it conduces to the contentment of tho peasant and induces him to remain on the land. - CHALLENGE TO SANITY. "If the present state of affairs continues, wo shall bo forced to contemplate tho wholly unsatisfactory spectacle of tho low cost producer in .Denmark or New Zealand, in Canada, or Australia, being forced to abandon his farm because the Governments of the industrial countries arc determined to make production remunerative to their ■own sub-marginal producers. 11nsi is n, challenge to economic sanity. me industrial countries must realise that rhe agricultural exporting countries will be forced as a desperate method of employing their pooples, and ot mamaa ning some reasonable balance of payment*? to imports drastic*ly •uid to develop many forms of second--1 ry industries for which they are far "erom being economically well fitted. On tho qupta subject the writer Sa''<Few Dominion statesmen appear to have realised that Empire markets can,ot bo expected, at loifet for years o some, to compensate industrial Britain •or loss of foreign export trade. But »yen where this is realised, tho tcims .ranted by Great Britain in the recent irade treaties, when coupled with.the intention freely expressed in United kingdom agricultural circles.to impose uiotas on Dominion meat and ilaiij wodwe, arouse grave misgivings. Like ill young countries, thoDominions aic .nxious to develop their natural iclourccs; in some cases, indeed, then national safety appears to depend upon ~ fuller use of largely unoccupied tor•itorv They are all debtor countries md have given proof of .their anxiety -o meet the service of their loans. Their debts have been largely incurred oa public works, such as railways, to open up land for agricultural purposes. GREAT ADJUSTMENT TASK. In a third and concluding article, the writer proceeds to constructive sugges--10«0n the other hand," ho says, "thero can be no doubt of the determination of the people of this country to re-estao-lish British, agriculture on a more prosperous basis. The English or .Scottish farmer, after many years of depression —relatively to most other classes ot the community—found himself exposed to the effects of the catastrophic fall in -world prices <*f agricultural products He watched tho progressive closing ot other import markets and realised that this meant the diversion of an everincreasing proportion of world exports into Great Britain. Ho found the situation intolerable, and seems at tlie moment to have the pretty general support, of the urban vot\r- „ "Within tho British Empire far greater opportunities exist for coming to grips with these problems than in any other group of countries. The Dominions have already accepted the principle of limitation of their tariffs in order to encourage complementary production on an Imperial scale. With suitable modifications some similar standard is needed to apply the measure of complementary production to Empire agriculture. A great task of adiustment which • was not faced at Ottawa, and possibly could not then have been dealt with, is now demanding the attention of tho British and Dominion Governments. If it is to lie successfully carried out, both sides must be prepared for some sacrifices —for some limitation. In the light of the 'self-denying ordinances,' accepted by the Dominions at Ottawa for theit tariffs on industrial goods, the order of preference for agricultural produce on She United Kingdom markets —first home produce, second Empire, and third foreign. needs to be qualified to make it clear that tho homo farmer cannot ex poet shelter from oversea Empire competition if his costs 6f production art • unreasonably above the price at whicl farm products can be imported. Similai considerations, of course, limit the Dominion farmers' legitimate expecta lions of preference in the United King dom market over foreign goods. "Busy Ministers cannot be expected to devote tho necessary time to such matters. -An obvious method would be io securo general agreement in Ihc Commonwealth for tho setting-up of a •joint standing committee on economic policy. A SURREY OF FACTS. "A first necessity is a survey of the facts of production. Which branches of each agricultural industry aro oJ special importance to each part of th< Commonwealth? How do costs of pro duction compare? Then the market situation must bo examined for smgli products.. Factors, such as trends to wards over-supply and elasticity of de inand must be determined, and tht probabilities of renewed import dernane from countries outside the British grouj must b'3 assessed. Sound commercia relations with foreign customers fo; British manufactured goods or coa must be taken into account. It woul< bftcomo possible to suggest in wluv fields of agricultural activity Grcai Britain could wisely pursue a policy o: development; in what a maintenance of tho status quo should bo the ob ■irvtive- where :i dr/tnito retrogrossioi 'might be '.to both the national and tin

common, advantage. Indications could then bo given to the Dominions of the forms of production they could develop in relation to the United Kingdom market, and where a stanclstill policy might prove necessary; and foreign commercial policy could be placed on a more satisfactory footing than during the experimental stages of the revival of United Kingdom agriculture. •DANGER OF PIECEMEAL PLANS. "There is no doubt of tho formidable nature of the undertaking. If it is believed that tho present glutted markets, exaggerated barriers to agricultural imports, and regulation of production arc temporary phenomena of the depression, then such efforts may not be necessary. If, however, Mr. Elliot is right and science has brought us to a stage when the adjustment of supply to demand has become ono of tho world's major problems, then it would bo folly to neglect to faco all tho issues. If a planned economy is to be our portion, piecemeal plans cannot be adopted without grave danger, and the Government, upon whom the responsibility for planning must ultimately rest, -would be well advised to secure the best machinery for the formulation and discussion of alternative plans. "It has often b.ecn the fate and privilege of this country to exercise world leadership. Onco again it may happen that she will give a lead by refusing to turn from Free Trade to economic nationalism and will evolve methods of co-operation which, while preserving to each country its reasonable aspirations, will yet retain for all Bomp, at least, of the benefits to be devived from k tlie division ?t labour."