How Britain Trades
Somerville, H.
HOW BRITAIN TRADES By H. SOMERVILLE THE trade policy of a political unit comprising one-quarter of the land and people of the globe must mean something to the prosperity, and perhaps to the...
...In some lines the dominions will supply their own needs, and in others they will buy from the mother country...
...The British manufacturers who carry the banner of imperial preference do so only as a cloak for national protection...
...The system has actually been in operation since before the war...
...In the case imagined Canada would raise her duties on American steel to prohibitive heights and would admit British products free...
...They might agree that Canada will supply herself with steel bars and get sheeted steel from England...
...Though the British empire is in no sense a fiscal unit, the empire does provide Britain with valuable markets...
...other European countries have been gaining on Britain while the advance of Japanese cotton in the Chinese and Indian markets has been phenomenal...
...Imperial preference can only make progress in the degree that Britain builds tariffs against foreign goods...
...Later figures would not tell a better tale...
...Beaverbrook soon found that the dominions, his native Canada among them, were not in the least likely to allow their industries to be swamped by the competition of British manufactures, as they undoubtedly would be swamped if they were deprived of their tariff dykes...
...A wide extension of imperial preference necessitates British tariffs against not only foreign goods but foreign foodstuffs and raw materials, because these are the chief commodities the overseas empire countries have to export...
...Britain feels that her old free-trade system no longer serves her purposes, she must get reserved markets somewhere, and she is not likely to get them except in the empire, but the terms on which she can get them are still matters of doubt and dispute...
...The Labor party officially denounces tariffs, though there is a general belief that if it were not for the commanding influence of Mr...
...The latest version of Empire Free Trade is very much like the old colonial system which caused the American colonies to revolt against the British crown...
...The dominions have absolutely complete fiscal autonomy and they build steep tariff walls against the mother country, though the walls may be a row of bricks lower than those against foreign goods...
...So Lord Beaverbrook made one concession after another till he admitted that the dominions must protect, even against the mother country, all the industries they desired to protect...
...it is the entrepot for their distribution through China...
...The loss of export trade is the reason for Britain's unemployment problem which receives constant advertisement abroad because of the dole granted to the victims...
...Baldwin, the Conservative leader, has" recently put forward a new policy intended to satisfy imperial sentiment and the insular British demand for protection...
...Here is the supreme difficulty...
...The vision of the empire as an "economic unit" is alluring to British eyes and it acquires a new meaning today when the United States exists as a mighty area with internal free trade and there is talk of a pan-European economic system...
...Baldwin "imperial rationalization...
...Philip Snowden the Labor movement would quickly depart from Cobdenite orthodoxy...
...All parties, capital and labor, protectionists and free traders, are agreed in professing support for empire development...
...There is nothing common to the whole except allegiance to the king, and the king governs nowhere...
...The most challenging policy is put forward under the name of Empire Free Trade by Lord Beaverbrook...
...Doubtless Britain would retain much of her trade with these countries if there were no imperial relationship but, on the other hand, it is quite certain that this relationship does secure for Britain a favored position...
...Britain could not reciprocate for the simple reason that Britain had no tariff: her markets were free to all...
...Britain's share of world exports fell from 13.9 percent in 1918 to 11.4 percent in 1927...
...Empire Free Trade, imperial preference and imperial rationalization are the slogans of rival politicians, but the economist knows them to be the labels of problems still unsolved...
...Australia's preference to Britain has been largely dictated by Australia's constant need of borrowing in the London money market...
...Automobiles loom largest among the protected industries, and American motor firms have set up branch factories in Canada to supply the British market...
...The small Liberal party finds the defense of free trade to be the principal remaining reason for its existence...
...This is not only because of political preferences but because the empire includes young and growing territories, like Canada...
...Or certain regions in Canada would be reserved for the home producers while others would be open to the British...
...Indeed the incredible has happened, and Japanese cotton cloths are now sold retail in Lancashire...
...Empire Free Trade, in its original and revised versions, is plainly impracticable...
...The British empire, however, means less than it might because its unity is of the most nebulous kind...
...In its original and simpler form Empire Free Trade meant no tariff walls between empire countries, and a ring of tariffs around the empire against all outside...
...Imperial preference" as practised by Canada is more a concession to the dominion consumers than to the British manufacturers...
...He is now saying very little about the dominions and is concentrating on the non-self-governing empire, excluding India...
...THE COMMONWEAL May 21, 1930 The solutions put forward for Britain's trade problem may be put under four heads...
...The unification of Germany and the development of the United States meant the end, not of Britain's prosperity, but of her old predominance...
...South Africa, under a Dutch majority, has recently been raising Germany to the same preference basis as Britain...
...Since the war, Britain's relative decline has been more rapid...
...Even in the empire countries American progress has been faster than British.-^Though the chief competitor, the United States is not the only one...
...All its prominence is due to newspaper advocacy...
...her destiny must lie with the development of her empire as a vast unit with unequaled resources in raw material and potential markets...
...Born in Canada, where he made a fortune by promoting a cement trust, this gentleman came while still a young man to England where he multiplied his millions and made himself a newspaper power second only to Lord Rothermere, the brother and successor of the late Lord Northcliffe...
...India is not selfgoverning in all things but the regulation of tariffs is a sphere in which native Indian influence is allowed to be supreme...
...With his newspapers, his money and his ability, Beaverbrook can force his policy on the attention of the country...
...In practice, however, the non-self-governing colonies are not so amenable to the manipulation of their tariffs by London...
...It is questionable whether the world would tolerate Great Britain's domination over so great a part of the earth if it were to be exercised for exclusive trading monopolies...
...When the industrialists have made a bargain to their mutual satisfaction they will call in the governments to render it workable by adjusting the tariffs...
...Empire countries—including the Irish Free State— took 49 percent of all the manufactured goods exported by Great Britain and northern Ireland during the two years 1929 and 1928...
...Hongkong imports enormous quantities of foreign goods but Hongkong is not their final destination...
...However, the protectionist policy even in the most limited degree, has not been accepted in Britain as an accomplished fact...
...Since the war Britain has protected a few of her industries and when she has done so she has allowed a preferential rate to empire imports...
...The tariffs of the crown colonies can, in theory at least, be dictated by London, and if the colonial markets could be reserved exclusively for British exploitation they would go a long way to solve Britain's trade problem...
...It was impossible to expect that she would always retain the long lead she established after her defeat of France in the Napoleonic wars...
...The United States has taken much of the trade Britain has lost in South America, the far East, and in Europe...
...This plan is called by Mr...
...For example, the steel firms of Britain and Canada will confer...
...The residents of Singapore would protest very loudly if they found that local considerations were not the chief determinants of their tariff...
...Until the war it was one-sided, given only by dominions to Britain...
...Doubtless the Canadian steel firms would be willing to make a present to Britain of the dominion markets now supplied by the United States...
...another is lower wages and the jettisoning of social services alleged to be burdensome to industry...
...The reasons given in explanation are disputable and we may confine ourselves to the statement of fact...
...The British government is to be free to impose tariffs as it thinks fit without taxing food or, presumably, raw materials...
...It has not been adopted by any political party or even by any individual politician of the front rank...
...These four policies are not mutually exclusive...
...Great Britain, it is said, cannot join with the United States and she cannot throw in her lot with a European combination...
...There is no questioning that Britain's best prospects of improved markets are in the countries where the British flag flies...
...Britain was losing her supremacy in world trade before the great war, but her relative decline in that period was attributable to what may be called natural causes...
...One is "rationalization," a word covering a multiplicity of schemes...
...Whether British and dominion manufacturers could agree on a division of production and markets, and whether the consuming public would ever permit tariffs to be adjusted at the will of the imperial rationalizers, are questions that the future will answer...
...How can it benefit an industrialized nation like Britain to raise its costs of living and of production...
...Discrimination would destroy the trade of Hongkong as a port, for it would be an attempt to impose a British tax on the millions of consumers in China...
...Though it is impracticable as a policy it may make a great appeal as an ideal and influence profoundly the politics and economics of Great Britain The Conservative party is committed to the policy of imperial preference which only means that the different countries of the empire give each other better tariff treatment than they accord to foreigners...
...It is fallacious to regard the trade of Hongkong as trade of the British empire and it would be impossible to put a heavy tax on foreign goods entering Hong-~ kong while giving free entry to British...
...His proposals no longer merited the name of Empire Free Trade but he persists in using a description that he thinks will appeal to the British people...
...Separate industries in the different parts of the empire are to get together and agree on a division of markets...
...a third is tariff protection or "safeguarding," and a fourth is "empire development...
...HOW BRITAIN TRADES By H. SOMERVILLE THE trade policy of a political unit comprising one-quarter of the land and people of the globe must mean something to the prosperity, and perhaps to the peace, of the rest of the world...
...To do the British empire justice, it has generally followed the principle of letting each part be governed primarily with regard to its own local interests and not for the sake of profit to the mother country...
Vol. 12 • May 1930 • No. 3
