WELLINGTON NEWS

Hokitika Guardian, 21 March 1932, Page 4

WELLINGTON NEWS

TARIFFS THE TROUBLE.

(Special Correspondent),

WELLINGTON, March 19,

One of tlie main causes of the world depression can be fairly attributed to tariffs. After the War there was a break-up of great political units and quite a number of new but small nations emerged. This brought into existence a number of new frontiers with. ..Customs barriers, and thus countries that for a long time had free trade access to one.another were split up,am), trade . was hampered l»y tar.ff., walls. International bankers pointed., put in m- -manifesto issued some, time ago,,-; that “There can be no recovery in Europe till politicians in all territories, old Mid new, realise that trade is not war, a process of exchange, that in times of-peace our neighbours are our customers, and that their .prosperity is a condition of our well-being. If we check their dealings their power to purchase our goods is reduced. Nothing has been done to check or revise European tariffs, but recently Britain and France have decided to take a hand in the matter, at least in the Danubian countries, and try to straighten out affairs. Some sort of ail excuse Can he advanced for these pobr European counties Where the standard of life is very low, hut no ex* cuse can he offered for so powerful and so, .rich a country as the United Stntos The Hnwley-Smool tariff which received the approval and-bles-sing of President Hoover,'! has been the greatest menace to national trade for it ring-fenced a country with the greatest purchasing power and most of the world’s monetary metal. Add to this that since the War America has become a greater creditor nation. The fact is this that Ameica has not realised her duties as a creditor country, and creditors have duties just.as much as debtors. In the face of heavy war debts due to America, she is expected to continue a large export trade and show a substantial and favourable trade balance.

That this was impossible was clearly perceptible to the economists 'and leading bankers and financiers in the United States and they have pleaded again and again for a lowering of the tariff, but all in vain. When the debtor countries- funded the debts owing to the United States they shouldered a very heavy burden, which however, could have been borne had not the tariff been superimposed, When the debts were funded the debtors agreed to nay to the United States, half-yearly, on June 15 and December 15, interest and amortization, and the agreement involved payment in dollars, and not in pounds, francs, marks, belgars or liras. Consequently the debtors have to ex* change 'iff tire currency exchange nfarkets their respective currencies for dollars. Every nation buying Amwiean goods must ultimately pay for those goods in American dollars, How to obtain those dollars to pay debts and for goods has been the crux of the whole thing. America could of course have eased the position by making loans to the debtor countries, and she did that for a time, her loans to Germany being on an enormous scale, jynd the assets have since become frozen. Germany and some other borrowing countries used the money for paying reparation and •war debts, s° tha-j debts were paid out of borrowed money, and debts were not decreasing but increasing bv leaps and hounds. A creditor country must he prepared to accept payment, largely, if not entirely in goods and services, and that has been the rule with Britain which is -still' a great creditor country. But the United States, with high tariff, shut nut the goods of the debtors who were obliged to pay up in international currency, that is in bar gold, which accounts for the accumulation of gold in the United States. ", Other countries, -in . ; self-defence, have been compelled to erdet tariff harriers, even Britain- has been obliged to abandon her traditional freetrade policy to protect herself. America’s export trade has declined, and she is this year receiving nothing from war debts and the economic conditions in the United States are as had, if not worse than any other country. To counter this America is indulging in a gi'eat currency and credit inflation scheme, and it remains to he seen whether artificial respiration will bring about a recovery. The internal price level is bound to rise but will it do more than that?