Evening Post. MONDAY, NOVEMBER 11, 1935. TO BREAK TRADE-FETTERS

Evening Post, Volume CXX, Issue 115, 11 November 1935, Page 8

Evening Post. MONDAY, NOVEMBER 11, 1935. TO BREAK TRADE-FETTERS

Saturday's and today's cablegrams record the first big gesture of the new Canadian Liberal Government, and it concerns the tariff, with which must be bracketed wheat. Approximately the Canadian Conservative (Bennett) Government came into office With die depression, and went out the other day with what we all believe to be the recovery. This Government fought the depression with a greatly-raised tariff and with a wheat-holding policy; it has just been replaced by die Liberal (Mackenzie King) Government with a tariff-lowering policy and with a promise to get away from wheatholding (though it is denied that this means'a precipitate liquidation). To the political-economic student the course of Canadian politics is thus peculiarly interesting having regard to the times, and also having regard to the high protective and wheat position existing in Australia. There seems to be no doubt that in 1930-31 Mr. Bennett thought that his tariff and wheat policies were the correct antidote for the gathering economic storm. To his critics they seemed to be trade-restrictive and therefore dangerous. His critics pointed, out, and continually have pointed out, that unsold wheat meant lost export trade and lost internal purchasing power; and that the higher tariff meant less imports from other countries, which in consequence would buy less of Canadian exports. But Mr. Bennett seems to have thought that his "Canada First" tariff would transfer the trade of foreign manufacturers to Canadian manufacturers.; that the latter's prices would not rise, and that their workers would increase; and that in this way Canada would maintain employment and would ride out die storm by a measure of "■self-containment." The Dunning (Liberal) tariff re> maineel in effect during part of 1931, when Customs receipts dropped from 179,000,000 dollars to 131,000,000 dollars. In succeeding years, under the influence of the new tariff and the gathering depression, the rate of fall was steeper, the figures being, in million dollars: 1932,104; 1933, 70; 1934, 66; 1935, 77. It was evident by 1933 that the new tariff was attended by an unexpected degree of revenue-shrinkage, but the ,Conservatives contended that this meant great increase in internal manufacturing and. in Canadian prosperity. How little the Canadian electorate accepted that representation has been proved by the Liberal victories, Provincial and Federal. Trade was not diverted wholesale from external channels to internal channels; instead, much of the trade disappeared, and what was left did not shield Canada from the devastating depression experiences of other countries, including high taxes that gave disappointing revenue-yields, and an alarming revenue position on State and private railways. The position now is that the country emphatically adjudges the Bennett Conservative trade-restrictive policy (tariff and wheat) a failure. How much of the blame belongs to this particular policy, and how much of the trouble was depression-trouble and therefore unavoidable, the electors do not care. The. depression Government .is now out, and the Liberals, who ruled the country during die preceding prosperity, are now in power with an absolute majority to take advantage of the new prosperity coming round the corner. "Broaden, do not restrict, trade!" is the Liberal cry. And clearly no period is more auspicious for a trade-broadening policy than the upswing fr,om a great depression, when commerce strains to throw off the shackles of five bad years. It will be seen that the general principles of the Liberal plan to severely cut die Conservative tariff and to break up the trade stalemate are clear enough. But the tactical method is likely to be complex. Canada, Britain, and the United States constitute a trade triangle. In the Liberal days of Sir Wilfred Laurier there was a United States tariff but no British tariff; now there is a very high United States tariff and the beginnings of a British tariff. Both the Canadian and the United States Governments have announced that their high tariffs are due for the axe; the future of the British tariff and of the allied "Ottawa Agreements" is uncertain; but all these matters are more or less inter-dependent, and bargaining (whether called by that name or not) necessarily enters. Wheat is a bargaining weapon, because the United Kingdom is a buyer and the United States is a seller; and the Mackenzie King Government's selling policy with regard to the huge Canadian wheat surplus must be framed widi an eye to the British consumer, the United States seller, and die Canadian producer. The cablegrams suggest that Mr. Mackenzie King's negotiating visit to Washington is preliminary to a similar visit to London, and that he went to Washington first not to show his hand over wheat but, because in Britain it is election time. Agricultural control policies in the United States (Wallace's) and in Britain (Elliot's) are new developments diat necessarily complicate any arrangement Between the three countries for reciprocal exchange of goods and for release of depression-surpluses; and the chief hope that these great complexities may be dealt widi to general satisfaction lies in die fact that the Washington and the Ottawa GovernJ merits appear to genuinely believe in I frrrr irndr, ;irul dial the British'

Government will not be behindhand in facilitating any escape from the "economic nationalism" to which so much of the world's troubles are attributed. While it is premature to predict how the complicated tactical position over tariffs and wheat will develop —and to what extent New' Zealand may benefit if the United States farmer can be persuaded to readmit Canadian farm products like milk and cream—it is reasonable to hope that Mr. Mackenzie King and President Roosevelt together may make a beginning in striking some of the fetters from the wrists of trade. If the Canadian "recovery" tariff becomes as low as election promises indicated, the tariff variations of Canada in the decade 1930-40 should provide an interesting page in a future historical study of the relationship between'high ( tariffs (Canadian, United States, Australian) and the Great Depression. But this after all would only be an instalment of a world history of trade-restrictions and self-containment policies, and how they failed to shield a single country from the industrial paralysis of 1930----35. Those political Columbuses who are now afloat searching for the Lost Atlantis of Free Trade have at any rate the favouring wind of worldwide discontent with twentieth-century trade-strangulation and with its corollary,/amine.amid plenty.