The Waikato Times SATURDAY, FEBRUARY 12, 1938 TRADE RELATIONS

Waikato Times, Volume 122, Issue 20422, 12 February 1938, Page 6

The Waikato Times SATURDAY, FEBRUARY 12, 1938 TRADE RELATIONS

Little has been heard during the last week or two of the discussions between Great Britain and United States regarding a trade agreement, but the proposal figures prominently in the daily journals of both countries. It is evident that the Dominions will be directly interested, although the Secretary of State, Mr M. MacDonald, has declared that the principle of Empire preference will be maintained. That will not exclude the possibility of adjustments, and already Canada and Australia have taken steps to be represented at Washington when the matters come up l'or formal negotiation. A proposal put forward by Mr. Bernard Baruch, one of the prominent figures in American business, lias attracted considerable attention. The exchairman of the War Industries Board has suggested that the two countries should “re-establish the sanctity of contracts by adjusting the war debts, ’ and that they should then establish a fixed ratio between the currencies of the United States, Great Britain and the Dominions. These ratios, he contends, should bear a constant relationship one to the other, irrespective of how other currencies may fluctuate. The parties would be free to adjust their exchange rates with all other nations but the ratio of British and American moneys would be fixed. Mr. Baruch holds that both countries should be free to create whatever defence forces they deem necessary. There would be no military alliance, but an understanding that in no circumstances would these forces be used by one against the other. The proposed trade agreement is strongly supported. By lowering tariffs, it is contended, the trade of all English-speaking countries will be increased and that will benefit a much wider area. The agreement would point the way toward a peaceful solution of the gravest problems. The door would not be closed to other nations. They could come in on a basis to be determined, but the United States would be free to adjust war debts with any of them on its own terms. The American would make standards of work, hours and wages a part of any understanding, and thus create a sphere within which there would be financial stability and a freedom to trade that would .reduce existing world tension. The plan obviously has been influenced by the views of Mr. Cordell Hull, Secretary of State and it shows the attitude of some of the industrial leaders. There are many who strongly advocate the retention of a high protective tariff. Mr. Du Pont, giving evidence before a Senate Committee, said: “I do not see how the principle of reciprocal trade agreements can be consistent with adequate protection.” That puts clearly a problem which the Dominion Government must face. It has claimed on more than one occasion that trade agreements form the basis of its economic policy, and at the same time it favours a tariff wall. The Minister of Finance sought to justify tariffs when he spoke in Hamilton this week. The issue will certainly arise when the time comes for the Dominion to determine its attitude towards the larger trade agreements that are to be negotiated by the best customer New Zealand possesses. The problem will be one of adjustment and it will be difficult to reconcile reciprocal treaties with high protection. A great deal may depend upon the ratio of the currencies, and if they were to be fixed then the question of exchange rates would at once arise. Any international effort to stabilise currencies and promote increased trade must affect this country, and there will be need for clear thinking and constructive work if it is to fit its national policy into the bigger plan and thus become a factor in the effort to lead the world into more prosperous and more peaceful avenues.