TAKING CARE OF THE HOME MARKET

Wanganui Chronicle, Volume 71, Issue 237, 6 October 1928, Page 6

TAKING CARE OF THE HOME MARKET

(By SIR GILBERT C. VYLE, Past. President of the. British. Associated 4 Chambers of Commerce.)

By re-adjusting the value of imports, we should get some compensation, it is argued, for the advantage:! which cheaper labour, inferior social standards, and lower taxation give to our competitors.

At long last Parliament has discovered through the Chancellor of the Exchequer a fundamental principle that industry is the real creator of wealth, and that the nation cannot be prosperous with a weak and unhealthy industry. Imports have to he paid lor by exports, either visible or invisible, and when wc sell something in the ordinary course of trade we have sonic s.ay in the form in which we will receive payment.

For the sake of convenience this generally assumes the shape of a cash credit freely spendable in any direction, but in national and international trade goods and services .sold are paid for by the goods and services bought. Ender our national trading system to-day we have little or no control over the form of payment for our exports. This is well illustrated in a rough way by supposing that we sold a ton of coal abroad and received payment by a corresponding value quantity of potatoes. We also suppose that we have enough potatoes for our needs in the process of manufacture by our agricultural industry, and we do not want any more potatoes, but wc do want some more wheat. Our overseas buyer says: “I am going to pay you with potatoes, and I am unconcerned with your internal needs and requirements,” with the result that, having no control over the means of payment, these foreign potatoes arc sent in and our potato crop is surplus. It has to be sold at a bankrupt price, which is a national loss to us as a community. Similarly in a mechanised product, loss of control of the form of payment allows manufactured goods to flow in here which create an unwanted surplus from our factories. resulting in national loss and closing down of home production. It may be argued that the foreigner who pays in these unwanted goods also, suffers in the depreciation of value caused by the surplus, and that we, as a nation, benefit by cheaper prices all round. The answer is that cheapness is entirely relative to the spending power of the people. A loaf of broad is cheap at lid if there is one shilling available to buy it with. It is dear at (5d if one has only sd. The crux of the whole matter is profitable production, bringing with it a full measure of employment. As my friend Mr Rogers, president of the Birmingham Chamber of Commerce, so forcefully put it, “Production will not only create an export, but also should be capable of preventing an unnecessary import.” With control wisely used, it would certainly prevent an unnecessary import. To those who argue that goods must be paid for by goods, the answer is that wc are not paying our way. Look at the huge deficit on goods account last year, leaving £391,000,000 to bo made up in what arc known as invisible exports. The crying need to-day is to reduce I this huge figure to more reasonable

proportions —to import less manufactured goods and export more.

Only in this way can we reduce that great standing army of unemployed of oxer 1,000,000 people, the great majority of whom arc anxious and willing to work. From fin unemployment point of view alone, some measure of control is justified. Profitable production depends on a full load on each individual works and every separate farm. To receive something from abroad while wc have men, money, management, and machinery unemployed in the country reduces proJit able production at home, and seems absurd, yet wc constantly practise it. It must not be forgotten that when we take into this country something we are capable of making here we arc really importing foreign labour to a high percentage of the invoice price. Our own workers have therefore to match their condition of living with the conditions existing outside, and if we desire, as I hope we all do to maintain and improve the general standard of living, why should we be always dragged down to the lower level of foreign standards and asked to compete with it at home 1 ? Further, our costs of production contain, in some form or another, our almost unbearable taxation. Afust we shoulder this, too, and still compete at home with those who bear so much less? Then again, take our social services. In one form or another they also find their way into our production costs. Is it fair to be asked to compete with those who do not support these services? This, surely, must be the answer to those who say our industries are inefficient if we ore unable to compete at home with American productions. Let us compare America, with her reducing taxation, now almost down to vanishing point, with our never-de-creasing colossal annual taxation. In-come-tax here is standardised at 4s in the £. In the United States last December President Coolidge admitted that the Americans were called upon to pay 3Ad in the £, and there has recently been a big cut in national expediture, which is resulting already in cheaper prices to the consumer. In motor-cars alone the reduction means £2 on a small car and £4 on a big one. What does America spend on social services in any way comparable with ours? And then —the most important of all—she controls the form of payments for her exports in a way which leaves a full load on the factory, and profitable production satisfies the high needs and standards of her people. According to the returns of the United States, Customs receipts for 192 G were £120,000,000 sterling, and this, spread over 115.000,000 people, means that for £1 per head of the American population, their industries were “safeguarded” in such a way as to ensure a favourable chance of profitable production. Here in this country our Customs re-

ceipts, raised mostly on goods we do not make and cannot hope to produce, average 55s per person. Could anything be more discouraging and heartbreaking? Is it not possible to vary the incidence of this 55s per head in such a way as to give us profitable production in our industries, not forgetting the greatest of all industries, agriculture? Safeguarding of Industry as practised by us is a very poor thing. It is neither one thirig nor the other. It is so hedged round with restrictions, obstructions, and various machinery for delay, that an industry may well be dead before relief could reach it.

An unconsciously true criticism is to be found in the reply of a man who, on being asked how he was getting on with his safeguarding application, replied: “Oh, lam still fighting the Board of Trade.” The word “lighting” sums up the whole position. The machinery of safeguarding is 100 cumbersome and not sufficiently technical;

If agreement can be found that some sort of control ot the character of our imports is necessary to the maintenance of profitable industry In this country, there only remains the question of machinery. This should not be difficult to organise. It should be flexible, easy to to operate, and prompt in its application. Its method of working should be simple and obvious to everyone, and should be based on profitable production and nothing else. The main function of the organised control should be to discover what, if any, amount of adjustment in the value of the import is necessary to compensate for the difference between: (a) The hourly rates of wages, (b) the hours worked, (c) the standard of living, (d) the social services, (e) the taxation in this country and the country sending in the import. Industry in this country has a right to be relieved of competition in our home market until such an adjustment is. made. Then we can proceed with a real preference to our Dominions, which would bring back much of the trade that wandered elsewhere, and we should have something to bargain with in other countries where our goods arc denied free entry. I firmly believe that the stumblingblock to-day in the way of loxver tariff level in Europe is due mainly to the inequality of our position vis-a-vis the Continental countries. Our oxvn home market is a very largo one and very valuable. Why not “take care of it” and “safeguard” it for our own people?