The Times TUESDAY, MARCH 15, 1938. Bo Armaments Help Industry ?

Manawatu Times, Volume 63, Issue 62, 15 March 1938, Page 6

The Times TUESDAY, MARCH 15, 1938. Bo Armaments Help Industry ?

Tlie argument is oi'ten heard that the arms race has helped to end the slump, it would be much more accurate to say ihat the exact contrary is the case and that in so far as trade has recovered from the slump it is in spite, and not because of re-armament.

It is, of course, true that certain classes of industry have been helped directly and others indirectly by the vast sums now being squandered on armaments. But it is also true that the money might have been much better spent—and probably would have been if there had been no arms race, it is at any rate difficult to imagine how it could have been spent worse.

But leaving this important point on one side, it is incontestable that the demand for a number of primary products, especially metals, has been greatly stimulated by the boom in arms manufacture; that employment has increased and that capital expenditure in the form of new factories, new equipment and land purchase has resulted in vast quantities of idle savings being put to active use. It is necessary, however, to remember that in an atmosphere of confidence, precisely similar results would have been obtained through the natural expansion of peaceful trade.

Meanwhile, nations classed as aggressors as well as those who defensively are preparing against wartime blockades, have engaged in a rapid effort to become economically self-sufficient. The fact that it may be uneconomic to produce, instead of buy, the articles in question or suitable substitutes makes lio difference at all. If they are necessary for carrying on war, they must be produced at home regardless of cost.

Dozens of examples can bo cited, among them Great Britain’s determination to foster the manufacture of oil from coal when the natural product is far cheaper; Germany’s and Soviet Russia’s decision to replace plantation rubber by an artificial product which costs at least five times as much as the natural article; Italy’s strenuous efforts to grow all her own food and to dress herself in artificial wool; Poland's resolve to create an entirely new industrial area in the centre of the country where it is less vulnerable than her present sole source of supply of many wartime necessities, namely, Silesia.

The dislocation caused by these attempts to force industry and agriculture into artificial channels has greatly hampered Europe’s recovery from the slump. At the outset, of course, all such plans create an internal boom atmosphere because of the huge capital outlay necessary to erect the requisite plant. It is when the new factories are entering into production in a big way that the test comes. Costs are so much higher that the purchasing power of the buying public may be severely strained.

Another outcome of self-sufficiency campaigns is an incessant demand for new territory, thus giving another boost to the arms race. Countries which are concentrating on making themselves self-supporting are naturally anxious to possess sources of raw material for which they can pay in their own currency instead of in goods, gold or services.

To-day most European countries still admit many imports only under quota—so much from this country, so much from that. Others make reciprocal arrangements by which so many tons of, say, wheat are exchanged for so many gross of cameras. Others again differentiate in their tariffs in order to exclude goods from certain countries while seeming to observe to most-favoured-nation clauses of their trade treaties —as when Germany gave a specially low rate of duty to milk from cows pastured above a specified altitude thereby excluding in effect the milk of all countries except Switzerland and Austria.

The countries in which autarchy is in fullest blast are Germany and Italy. There can be no doubt that both would like to drop it and would drop it to-morrow if they were not afraid of being starved for raw materials and foodstuffs in that “next war,”