The Dominion WEDNESDAY, AUGUST 17, 1921. TARIFFS AND TRADE

Dominion, Volume 14, Issue 277, 17 August 1921, Page 4

The Dominion WEDNESDAY, AUGUST 17, 1921. TARIFFS AND TRADE

Up to tho present the new United States tariff has attracted attention in this country chiefly because it seems likely that it will exclude New Zealand exports of wool and other products from the American market. It has at the same time a broader interest, however, particularly in view of the fact that our own tariff is shortly to come up for revision. The experimental development of protectionist policy upon which America is at present engaged is very boldly designed. As its name implies, the Emergency Tariff which imposes high duties on most kinds of primary produce is a temporary measure—it has a currency of six months —but Congress is at present working on a permanent tariff, which its advocates claim “will permit the products of American labour to compete with foreign goods in the American market without sacrificing the American'standard of living.” It is proposed, to achieve these results by imposing duties which are estimated by the Republican members of the Ways and Means Committee of the House of Representatives to bring in an annual revenue of nearly 700 million dollars —more than twice the tariff revenue raised last .year. Available information indicates that the high duties now imposed on primary products will take their place in the permanent tariff. American newspapers just received by mail quote tho majority report of the Ways and Means Committee as stating that the high rates on agricultural products represent a return to normal. The Act of 1913 (the report observes) practically placer! the farmer on the free list. In the rehabilitation of our industries the products of agricultural industry, in. which some 30.000.000 of our people are engaged, are entitled to protection on the same basis as those of other industries. From the farms come the raw materials for two prime necessities of life, food and clothing, in the production of which wo should at all time* be self-sustaining.

Although influential supporters of the new tariff anticipate the greatly increased revenue already mentioned, they at the same time argue that high duties will stimulate American industries and cause a revival of business within the United States. They contend that industrial depression in America is due to the flooding of its markets with foreign goods sold at less than the American cost of production, and that the remedy is to exclude these goods. . On the other hand, ■ Democratic politicians and newspapers are protesting that the new tariff will impose such a burden on American consumers that they will compel its •repeal or modification within the life of the present Congress. A Democratic member of the Ways and Means Committee (Mr. Garner) asserted recently that if the new rates brought in all the revenue anticipated by their advocates, the additional burden imposed on the consumers of the nation will amount to at least 2000 million dollars. Opponents of the tariff also maintain that it will seriously handicap American export trade, which' of late has shown a heavy decline. A cartoon published in one American newspaper depicts the tariff as a high wall as effectually shutting in American goods packed for export as it shuts out foreign goods offered as imports. Since it must tend to raise prices and producing costs within the United States, and to provoke retaliatory measures b.Y other countries, the tariff is., of course, bound to injure American export trade. In their anxiety to find an immediate specific for trade and industrial depression, the advocates of high duties are apparently content to ignore the probable effect of these duties on the prices charged to the American consumer and in hampering export trade. They seem equally indifferent to the consideration that America must import freely if she is to collect as much as interest on her heavy external loan's. The policy embodied in the tariff wears an extraordinary appearance when it is considered that as an outcome of the war the United States has exchanged the status of a debtor nation for that of a great creditor nation. Before the war American securities to an amount of something like £1,000,000,000 were owned in Britain alone. Mr. Reginald M'Kenna estimated recently that quite apart from private indebtedness between nationals (a category in which very

large amounts are owing to. the United States), the various countries of Europe (excluding Russia) owe America something like 2240 millions sterling, of which sum Britain is responsible for nearly 1000 millions sterling. It is another factor that of late years America has built up a great mercantile marine. Before the war she was well placed to maintain a big surplus of exports. A considerable part of her exports went to pay interest on foreign capital invested within her territory and shipping charges. Now she must import largely or become a creditor only in name. The true solution of her difficulties is no doubt to be found in a bold policy of foreign investment, together with such adjustments of her industrial organisation as would tend to a great expansion of trade. An exclusive tariff seems much more likely to intensify her difficulties than to afford relief. The aim in this country ought to be to avoid any such headlong and ill-considered experiment in tariff legislation as is now being made in America. Our national circumstances, of course, arc widely different from those of the United States, but here as elsewhere an undue reliance on tariff protection is likely to lead to unforeseen and undesired results. A reasonable measure of protection is one means of fostering manufacturing .industry, but it would bo foolish to go.so far in this direction as to penalise the primary industries on which national prosperity for the time being mainly depends. In Australia, representative bodies of New South Wales primary producers have lately been urging that the new Commonwealth tariff imposes an increased load on primary industries which they cannot successfully carry in tlie present unfavourable state of oversea markets. These producers contend that excessive duties have been imposed on machinery, tools, containers, and. various other articles (twenty in all) necessary to their industry, and that the effect will be to hamper production and limit the exports of primary produce which are tho only means Australia has of creating credits overseas and establishing exchange with other countries. This country is relatively even more dependent upon its primary industries than Australia, and if the mistake of penalising primary production in the hope of fostering secondary industries has been made in tho Commonwealth, it certainly ought not to be repeated in New Zealand.