THE AND DAILY SOUTHERN CROSS TUESDAY, DECEMBER 6, 1938 COUNTER TO NAZI TRADE

New Zealand Herald, Volume LXXV, Issue 23213, 6 December 1938, Page 10

THE AND DAILY SOUTHERN CROSS TUESDAY, DECEMBER 6, 1938 COUNTER TO NAZI TRADE

A warm welcome has been given to the robust declaration by Mr. R. S. Hudson, Parliamentary Secretary to the British Overseas Trade Department, that Britain intends to take up and meet the challenge of German aggression in world markets. Some effort of the kind is clearly necessary if Britain is to counter the new factor that Nazi economics have introduced into international trade. Germany is using the mailed fist to achieve economic as well as political ends. People have become used to the unhappy idea that the League system and collective security have been superseded by power politics, but do not as yet realise that, side by side with that browbeating systenij Germany is elaborating the method of power economics. The two work together in reciprocal fashion. Germany uses - her political pull to further her trade and her buying power to assert political influence. No doubt the interaction of such influences is not new nor peculiar to Germany, but the Nazis are using them with almost irresistible force on her small neighbours, especially down the Danube | and around the Baltic. Even Italy and Poland find themselves being drawn by the German centre of trade gravity. Apart from the political hegemony Germany has established in Europe, the Nazi 'State has pooled and concentrated in its own hands the foreign buying power of its 80,000,000 people. In consequence Germany has frequently been able to make unconscionable bargains with weak sellers among her poor neighbours. Britain possesses financial and economic power sufficient to meet this competition, but the difficulty is to mobilise and make it effective. It could be done if Britain adopted totalitarian methods, with control of exchange and imports and exports, but Mr. Hudson repudiates such tactics. Their adoption would involve the surrender of that economic freedom —and individual liberty with it —which Britain and the other democracies are intent to preserve. So Britain is faced with the fact that, although as the largest importer in the world she should be able to play a stronger game at power economics than Germany or any other nation, her buying power is divided and cannot under her free economic system be directed purposively. To a certain extent it is, however, by trade agreements, preferential tariffs, quotas and the like, and Britain is being urged to use these weapons in South-East Europe and the Baltic. But she has her home producers to consider, to say nothing of the Empire, South America and the new pact with the United States. In any case Britain could not buy from these countries to the extent that Germany does. The latter takes more than 40 per cent of the exports of most of her small eastern neighbours. Her trade and theirs are naturally complementary and, as the Times acknowledges, it is useless arguing against Nature. Even so, Britain, and other Western democracies, can offer the hardpressed Eastern European countries some relief from the complete economic stranglehold Germany seeks to apply and save them from being reduced to the condition of political and trade vassals of the Third Reich. So far as Britain is concerned, if her saving influence is to be felt, her buying and selling power, it would seem, should be organised in larger units and possibly given some official direction and encouragement to follow certain lines. Hints dropped in London suggest that Mr. Hudson intends to work for something of the kind through his department. Given a sufficient mobilisation of buying and selling agencies to counter the concentration commanded by Nazi State economics, Britain should be more than able to hold her own in the campaign because she can finance the trade. Therein lies Germany's great weakness, that she cannot pay in "real money." She has been reduced to barter. Her present methods were forced on her in the beginning by the ruinous post-war demands of the Allies and now it is uncertain whether she can break out of the currency prison in which she is caged, or even whether the Nazis would wish her to break free. Necessity has discovered for them the new weapon of economic black|'mail to reinforce power politics. But their economic dominance does not win them goodwill. Hungary, for instance, may be glad to find a market for her wheat in Germany at better than world prices, but gnashes her teeth in impotent rage when she finds that she must accept | payment out of a limited range of German goods, also priced above competitive values. There is a limit to the demand in Hungary for mouth-organs, binoculars and obsolescent arms. When Britain buys, on the other hand, she pays in "real" or negotiable money and that earns her goodwill and tangible advantage. She may indicate that the London credits should be spent in London, but the choice is wide and the prices uninflated. Thus her smaller buying power may yet exercise a saving influence in these particular countries. And to enable countries to break out of the German net, there are British loans, such as those recently made to Turkey and Rumania. Thus Britain can help to ease the pressure on the small nations without any hostile intent to Germany, and at the same time assißt her own exporteri.