WAR THROUGH TARIFFS

Taranaki Daily News, 9 June 1931, Page 9

WAR THROUGH TARIFFS

AN AMERICAN INFLUENCE EXCHANGE OF GOODS CHECKED. DIFFICULTIES OF THE NATIONS. (From Our Own Correspondent). Wellington, June 6. It would seem that at the present; time the nations have embarked on another war, different in character in that it does not involve the - wholesale slaughter of human beings. The new.war is designed to kill one another’s trade, and a measure of success is being achieved. The tariff war was initiated by the United States, the country which cuuins to have won the other war. In 1922 the United States raised the tariff, but the world did not retaliate, because the United States was lending freely to foreign nations. America’s export "trade expanded because she was receiving paper promises to pay for the goods she sent to Europe. The slump of 1920-21 was drastic but temporary, and the world failed to profit by the lesson. For six years following the American export trade continued on a large scale, and it was believed by Americans that they had conquered the trade of the world; The United States had already become the greatest creditor, hation and the holder of more than half of the world’s monetary gold. America had become rich beyond the dreams of avarice. From the ambush of her protective tariffs and the exclusive right o* her domestic markets America developed mass production, which was further stimulated by the instalment plan of selling goods. Mass . production necessitated mass consumption. The monetary and financial situation underwent a change in 1927-28. America had to find an outlet for the abundance of money she possessed, and the stock gamble in New York was started. This grew in volume and intensity until the gamble became nation-wide. Stocks soared to giddy heights, which exceptionally high call money failed to check. Leading Americans believed that a new era had set in.' and that old-time worn theories must be scrapped. Prices were carried so high that many of the industrial shares, notwithstanding increased earnings, were yielding investors less than 2 per cent, per aniium. Attracted by the high rates for call money, Europe sent all the surplus monev it could lay hands on to partici- ' pate "in the high interest rate. American imports expanded, with the result that the Hawly-Smoot tariff was imposed. This tariff raised the barriers very much higher than they were, and called for protests from most of the civilised nations, who threatened reprisals, and have since put their threats into force. America’s export trade is contracting, and so is the export trade of other countries which have had to raise their tarills in self-defence. Canada, being such a close neighbour of the United States, promptly felt the effects of the American tariff, and in protecting herself fell foul of New Zealand, and we have seen quite recently how the trade of the countries can bo hurt. High tariffs have checked the interl change of goods and the interplay of demand and supply. Goods, that should if rid would go into consumption were the circumstances otherwise, are 'being banked up in the centres of production, or being forced into consumption through the abnormal Towering of prices. The conditions have called forth rationalisation, cartels, pools and Government schemes, all of which have had the effect of further restricting trade and lowerin'* prices. Governments have-not escaped, for the 'United States, with all its-riches, its huge store of gold and low . money rates, is burdened with a. deficit of £300,000;000; Great Britain has a deficit of £35,500,000; the Canadian Minister of Finance has just announced a deficit'of £15,000,000; the Commonwealth, of Australia has to. face a deficit of dyer £40,000,000, and little New Zealand, with a population of under a million and a half, has a deficit of £1,639,000; These deficits are records, and show that the balance-sheets of. the nations are lopsided. Nations must buy and sell, for goods and services in the last analysis must pay for goods and services. The underlying fault of the present abnormal economic situation is now fully recognised by leading American bankers, financiers and industrialists, .and there is now an insistent demand fbr a lowering of the tariff. It is useless expecting, or predicting a recovery so long .as legislatures impose restrictions oh trade. Early in the year the price index gave promise of improvement, but it is- now apparent tba this is but a flash in the pan- The tariff war between Canada and New Zealan J must have-far-reaching effects, although only a fraction of the world’s trade is involved.