LIVING STANDARDS

Wairarapa Times-Age, 15 July 1939, Page 8

LIVING STANDARDS

LOGICAL EtyD QF CONTROLLED EXCHANGE. STOPPING OF INTERNATIONAL TRADE. The countries of the world today may be roughly divided into two. groups, according to their different national methods of dping foreign trade. We can call them the freeexchange countries and the controlledexchange or autarkic countries, says Mr H. V. Hodson, the English economist and editor of the Round Table, writing in the “Listener.” Discussing the policy of the latter, he proceeds:— For the autarkic countries, not merely international trade as a whole but each separate transaction has to be justified by the purposes of the State. Since individuals cannot be allowed to trade! abroad as they find profitable, a free; exchange market cannot be permitted, but foreign exchange must be rationed according to the will of the State. Since there is no free exchange mar ket, roundabout trade becomes very difficult: the tendency is to try to make

imports from each individual country balance exports to that country. This precess also diverts foreign trade from its best and deepest channels. It would i mean, for example, that Britain could only buy from Japan as much as Japan bought from her. As the Japanese de not want any large quantity of British goods, Britain would have to buy few er Japanese goods: Japan would then be unable to pay for so much Austra lian wool. Australia would have to cut down imports of Belgian steel, and British motor manufacturers would find the Belgian market for their cars closed. Everyone would be worse oil’. The logical end of the controlled ex change system is that international trade stops altogether, and every country makes or grows everything for itself. Since countries in northern Europe, for instance, cannot grow bananas or coffee, their people would j just have to do without—not because I any other country was preventing them from buying, but as a result of their own national policy. No country has yet quite reached that extreme, but "the further that countries pursue selfsufficiency, the lower their standard of life is bound to be.