WANTED-A NATIONAL POLICY

Dominion, Volume 11, Issue 120, 7 February 1918, Page 5

WANTED-A NATIONAL POLICY

FUTURE OF BRITISH TRADE STATE CREDIT TO PROVIDE CHEAP MONEY (By F. M. B. Fisher, Ex-Minister for Marino nnd Customs, Now Zealand, in the London "Morning Post.") One of tho most complete revolutions accomplished in.Great Britain since the war started has been in regard to the attitude of financial problems. If, four years ago a Chancellor of the Exchequer had askod a group of oity men jf tho nation could possibly havo sustained for a year an. expenditure of six millions a day, the unanimous and immediate reply would have undoubtedly been "No," and'the Minister would • have been regarded as a lunatic at large. I well remember in tho end of the year 1915 discussing the question of war finance with one of-the financiers/who visited America in connection with the raising of the first British loan. He was convinced that tho [Allies would 'have enormous difficulty "in carrying on for another year," and "this opiniou was shared. by many of the leading bankers at that time. The war has shown clearly, however, the power' of what we may call 'national credit. It is not a new force in tho system of economics. There have been occasions when the State has been forced in an emergency to draw upon this great reserve for'relief from temporary financial pressure; Marconi was not. •the inventor' of wireless telegraphy. Nor was he the',' original discoverer of ether, without which wireless' telc•graphy wbuild he impossible. Marconi's great and immortal service to '/mankind was" the practical method of 'harnessing the power provided by Na'•ture and turning it to'use, with what success it is unnecessary to. attempt to state. And as ether has been floating about in space since the world began waiting for the genius of man to jftnd it.useful employment, so this vast potential power known as national credit has always existed, awaiting tho genins of man to harness it and utilise it for' tho benefit of tho' people who 'createdit. 'Like the lightnings of tbn air, this almost unlimited power of credit has existed as long as the nation has existed. . But.', like the lightning, it has been regarded as a force which was beyond the power of man to control and utilise for. practical purposes. The war, .with. its enormous demands Tipon tho Exchequer, has caused bankers, financiers, and statesmen to use wer mid over again that marvellous force known as national credit. But : Jibne has ever realised, the extent or Valuo of this tremendous force until the huge expenditure entailed by the War has forced a knowledge of it upon '_+howi minds -which' have hitherto tfouhted its real value. At tho Outbreak of War. The Overseas Dominion Governments have long utilised to the full the power of national credit, hut in Great Britain the Byetem of using national credit on modern lines has hardly been permitted to raise its head. ' The one outstanding pre-war instance in which it-has ieea tried, .apart from national loans, lias been that of the Publio Trustee, a State-guaranteed publio official ; who urns a vast and complicated business on behalf of the State- and in the interests of itho.people. Any attempt to extend this'principle would almost certainly he doomed to failure under existing conditions. Vested interests 'largely control the proceedings of the House of Commons, and vested interests naturally enough resent any invasion by the State which is likely to. trespass upon their hitherto undisturbed pastures. Yet: the events of the war have clearly demonstrated in manifold ways that when, tho meshes are tightened about a great nation engaged in a death struggle on]v the .[nation itself is powerful enough to ■throw off the tentacles^which threaten to crush it. This.could pot have been more clearly demonstrated than it was in the very first week of thewar. The Spain arteries of supply, to Great Britain were threatened and attacked by 'Gorman Taiders. in many parts of the world. Our mercantile service was .at once ■ paralysed, not by tho German raiders, hut hy the' British insurance companies, which at first either refused nil risks on ships and cargoes or else charged such fantastic. and exorbitant .premiums as effectually to prohibit shipment from all parts of the world. That the marine insurance companies, were justified in this course is no doubt true, for they were trading concerns, out f° r profit which was being made with capital specifically ..lent for that purpose. It would have heen manifestly unreasonable to expect that these trading companies were eoling to shoulder these hazardous risks j'nt the expense of their, own shareholders. It .would havo hcon grossly unfair !to expect these small groups of slmrei'lioldcrs to .face tho enormous risks that very pronerly were a. fair charce upon the whole nation.., Tho Imperial Government was thus compelled to step in and organise a scheme based upon ; the nation's financial credit, which enj abled all risks upon ships and their ! cargoes to ho reduced to the limits of reason, and under this scheme the sellers of goods abroad were able to got : their goods away to tho markets of |Great Britain. State Control. This illustration serves well the purpose of demonstrating the complete failure of vast corporations with enormous sums of capital at their command to serve the State in time of war. British trade, at this critical juncture in tho early stages of the war, was thus saved from' complete paralysis by the use of that weapon known as national credit. In some form or an-' other the State has found it necessary to assume control and provide the necessary capital for other and different forms of industry and commorce. Shipping is controlled. Agriculture is .controlled. Railways are controlled. 'Foodstulfs are controlled. CoaT-mines are controlled. Why? Because it has heen found in these, as with marine insurance, that disorganised individual • effort employing largo capital for profitmaking purposes has utterly failed to protect the interests of the nation when the fight for existence became most pevcre. That much of this newlyassumed control has been unsatisfactory is true. These vast organisations of control could not be built up in a day, a.nd it was quite unreasonable to suppose that tho nation had, lying at its elbow, a group of Heaven-bom organisers who were ready to jump ii.'to the box-seat and successfully drive a team that had never been broken to harness. National control is a science —not a mere hobby for an Oxford enthusiast. Our.armies in the field have suffered enormously owing to tho fact that wo had not a sufficient number of • trained army commanders. To raise an army from 200,000 men to 5,000,(!00 is a comparatively small task compared to the difficulty of suddenly training men to command masses of soldiers in a modem battle. That our now-found-commanders may havo made mistakes is to the blame of tho nation, whicli failed to maintain an army largo .enough to adequately serve as a training Force for the higher commands. And so with food control and shipping control. Men unfitted for the taskhave been called upon in a sudden emergency to create, take over, or control vast and complicated organisations That they have partially or completely

failed is not nil their fault. The real fault lies at tlio door of the nation, which lias incessantly turned a, deaf ear to the warnings of tlioso who saw tlio danger ahead. National Credit in the Future. Wo aro not so much concerned now with complaints about what has been done. Tlio lessons of tho past three years lie before lis as plainly as though they wero happenings of yesterday, and it is for 'the nation to make up its mind as to whether it is going to retraco its steps and return to tho old level or take advantago of the knowledge which has been acquired hy the recent experiments, and entroneh itself on the now ground. Amongst the inoro certain elements of knowledge gained is that relating to the use and possibilities of national credit. Individuals havo used credit, but what is the valuo of the credit of an individual compared to that of a bank; of one bank compared to the credit of all tlie banks, or of all tho banks and all the industries combined compared to the credit of the nation?. Having been forced by circumstances to utilise this forco to an unprecedented extent, the question now is, why should not national credit, as used during a period of war, be similarly used ii time of peace? Tho blockade which the Allies have enforced upon. Germany might, in itself, become a twosword, in tho sense that wo are obliging tho whole German nation to adopt a policy of thrift and frugality which will fit them for tho production of cheap goods for tho world's markets. Once peace is declared, Germany must at onco seek rehabilitation throughout the world by means of cheap manufactures. It is only by means of cheap production that she can hope to regain her markets. Wo shall be faced with tho competition of a frugal, thrifty, and highly-organised nation as against a highly-paid people who will be'reluctant to abandon the conditions under which they have laboured during the past two years. Capital and Labour must agree to utilise the enormous power of the State. The State in, turn can, hy humane and boneficont legislation, do much to bridgo the abyss of class-consciousness which lies at the root of most, if not all, trade disturbances. Cati this hitherto unsuspected and undrcamed-of suppiy of financial power ho utilised and directed for the development and expansion of Imperial, trade after the clamours of war have ceased? There are many new and complex problerts lawaiting solution, but none .so vital and none so urgent as that of establishing trade upon such a basis as will enable it to carry those other burdens which the necessities of the State impose. Industry and the Empire's Wealth. Tho successful demobilisation, of the Arrny will entirely depend upon the capacity of ■ our industries to swallow and digest tho vast numbers of soldiers as they return to their avocations in civil life. We must bo ready to find new capital, new plant, new industries, and new markets for British goods. The apparently inexhaustible wealth of the Empire should he mobilised and made subservient to the noeds of industry. Mr. Robert Benson, chairman of the Merchants' Trust (Limited), and 0110 of the'foremost financiers of the day, recently delivered the following striking Utterance: .

'■'I would urge that whon the war is-over easy money at Homo—cheaper than our competitors' money in other countries —is a necessity. Otherwise Homo producers may be penalised and undersold, and the development of the estates of the.Empire, in which there is enormous potential wealth, will not como to fruition rapidly enough to "assist, in redeeming 1 part of the great burden of debt that wo have incurred. Production, however well co-ordinated, takes place, as it wei'o, on a field of battle, whore cheap money is ono of the 'most potent weapons. After thv war everybody is entitled to expect easy and cheap money. Therefore, I say, .let our- bankers and tho State face the .solution of the problem now. No power on earth, snvo the State, can face the problem effectively. National oredit can be mobilised and directed in its service as surely as a regiment of troops. It can be sent abroad for the purpose of either cac-tur-ing hew or of fortifying and rendering impregnable markets already gainerl , It. can be utilised for home service by standing behind the industries of the United Kingdom. The proposal outlined herein is set forth in the hope that it may furnish a scheme whereby the conditions of trade may be enormously improved. It is believed possible for a system to be devised which will give the British trader substantial advantages over his trade rivals, and thus bring about a departure from the old'method under which each individual trader or trade corporation was forced into single-handed competition against the all-powerful State-aided industries of foreign countries. And since trade is so paramount a factor in the life of the State, it would appear to be reasonable that the State should he something more than a passive spectator or even a hindrance, to the development of that upon which it is wholly dependent for its existence. It is, therefore, reasonable to set forth the maxim that trade shoukl develop with tho aid of, and not in spite of, the State, which has, in the past, perhaps unconsciously but very materially, harassed commercial progress. The Stato must, or ought to be, directly conscious of the variations and fluctuations of trade. The control of the circulatory' system of the Imperial' organism should not be left to individual or disorganised effort. Encouragement of Commerce. It is not tho function of tho State to diminish or discourage individual effort, but rather to exercise. a wise control and place behind tho activities and initiative of tho individual the advantages of State security which no individual effort can possibly create. Tho Stato cannot effectively use its vast powers and illimitable guarantees of stability unless it is intelligently conscious of the necessities of its own lifeblood. It becomes increasingly necessary, therefore, for the State to evince a live interest in the advancement and development of commerce. Not in such a manner as will impede or retard individual energy and initiative, but by giving such helpful assistance as will cnablo our traders and manufacturers to realiso that in their efforts to expand they shall bo backed by the whole credit and resources of the nation, in peace as in war. Tho financial efforts in the present war have amply demonstrated the vast resources of the nation and its prodigious wealth. The question is: Can this enormous power he wielded in peace as in war? The Governments of tho Empire can make such a scheme easily possible and irresistibly successful. At tho conclusion of the war countries which have been impoverished would he under ordinary conditions, treated with a caution and a closeness that would act in restraint of trade. It is essential, therefore, that British traders should be equipped, so far as it is possible to equip them, with the means necessary to enable them to enter those markets where disorganisation and financial embarrassment exist and the activities of our enemies have been long suspended. Only in this way can the Empire hope to boar the burden of an appalling war debt. But this attempt to remould tho finai/iinl and commercial conditions of Great Britain can never emanate from either Downing Street or Whitehall. It has long been a standing grievance nil the part of the manufacturers of this country that the Government has never helped them. This complaint is substantially true. But, if the Government has failed to help the manufacturer, it is equally true to say that in

the pnsfc Llio manufacturer has failed to help the Government. Trado in Great Britain has never been thoroughly organised as a whole. In isolated instances ovidence can ho found of individuals in a single trade, being grouped together and united upon a. common policy.. Especially docs this apply to foreigners who seek the protection of our flag. In Lnncnshiro ono finds a great power in tho cotton trade, which, as an aggregation of brokers, spinners, weavers, dyers, etc., has found its strength and safety in union and in common purposes, and the Lancashire people are a great force in this country only because they present a usited front whenever their industries arc assailed. Ripo for a Change. When tho British Cabinet Minister is directly reproached with having done little or nothing for trado as a whole, his answer invariably is that it is impossible to legislate for the manufacturers of this country until the manufacturers themselves are agreed as to what they want. Thus individual firms have been reduced to a state of helpless hopelessness. They have seen the German group bis industries and perfect a commercial organisation that worked hand in hand with a sympathetic Government, until German methods threatened to overcome the whole world. They have stood by and seen thriving British industries choked and strangled by the foreigner. Indeed, they havo seen important industries appropriated by Germans from under their noses and transplanted to foreign soil, there to be used in the process of devitalising England and sapping her power as a commercial nation. And all lor want of organisation. ill because there has been no settled policy and no mouthpiece by which the weight and power of our own peoplo could be fooussed upon those who have hitherto governed the country in ignorance of the true conditions. The timo is ripe for a change. But no satisfactory change can he brought about without the united efforts of our manufactiyers. If they have become despondent and dispirited in tho .past, let thounot forgot that the body or the nation is now tingling -with

new determination. No House of Commons ever yet defeated the purpose of a- righteous nation upon so momentous an issue. If the politician cannot make-up his mind ho must be "shocked" iuto action and directed by the brains that represent industry. The nation wants to win the war.. The nation also wants a- policy. Not a policy (enshrined in some Whitehall pigeon-hole, but a live, vigorous, constructive policy that will give our Empiro a new lease of life. Business men w-ant to know where they are. They want to know whether tho influence of the foreign party in. England is going tobe responsible for the future policy of Great Britain, or whether the fruits of war are going to be utilised in the interests of British trade. German trado is now cut off from the world's markets, and has been for _ tho past three years. The British business man 'wants a policy which will make secure tho extension of his existing business or enable him to embai'k upon fresh enterprises. He will do neither so long as this timid vacillation goes on.