The Daily News. TUESDAY, MARCH 15, 1921. REVIVING EUROPEAN TRADE

Taranaki Daily News, 15 March 1921, Page 4

The Daily News. TUESDAY, MARCH 15, 1921. REVIVING EUROPEAN TRADE

The recent statement made in the House of Commons by the President of the Board of Trade (Sir Robert Horne), in which he explained the measures taken with the object of reviving trade with the stricken countries of Europe, only partly reveals the great difficulties surrounding any effort to overcome the two chief outstanding problems connected with British trade with impoverished European countries, namely, the fall in foreign exchanges, and the dearth of money to pay for goods. The only practical means whereby these difficulties can be mitigated so as to render trade reasonably possible consist of credits, guarantees, and. an organised system of barter. It may probably be found necessary to utilise all these expedients if the British export trade is to reach the utmost of its capacity, and it is quite possible that it may be advisable for some scheme to be evolved whereby the Government co-operates with syndicates representing various manufacturing industries and financial organisations in order to place this foreign trade on something approaching workable conditions and security. For several months towards the latter end of 1920 many British firms found themselves burdened with large stocks for which there was no effective demand, in some instances the goods representing material manufactured pursuant to orders' received from abroad, but subsequently cancelled, this cancellation reaching an acute stage, and being due largely to the fall in Continental exchanges. Early in that year there was no sign of the advent of a period of depression setting in; consequently they turned out a considerable quantity of stock, and merchants were eager for delivery, so that the cancellation of orders caught them with warehouses over-burdened with goods, and this disaster led to unemployment, simply because the people of the countries for which large quantities of goods were destined found it out of their

power to purchase by reason of the high prices caused by the low value of their currency. An urgent demand for the goods existed, but inability to pay was the dominant factor in the ensuing trouble. The first attempt to deal with the problem was the introduction of the British Government’s well meant export credit balance scheme, under which a sum of twenty-six millions sterling was allocated, subject to certain conditions, for the purpose of assisting the financing of shipments of goods to Esthonia, Boland, Finland, Latvia, Czecho-Slovakia, Rumania and Jugo-Slavia, but it proved unsatisfactory, only a small portion being actually advanced. This may have been due to the rigorous nature of the Government’s conditions imposed to protect the interests of British tax-payers. At any rate, the scheme did not materially assist in the revival of export trade. The Government now proposes to guarantee exporters up to eighty-five per cent, of the cost to the buyer, who has to find fifty per cent at least, the Government. taking half the uncovered risk, whereby, it is considered, the exporters can arrange with the banks in the ordinary way, and this proposal is to extend to the British Dominions, but does not apply to raw materials. Apparently the scheme is very simple and practicable, but whether it will achieve its object remains to be seen, a weak point in its working being that the transaction of business with possible buyers in foreign countries is left to individual firms, instead of manufacturers and merchants acting in combination. Such a combination has been evolved by the woollen industry, and is known as the British Woollen Trades Export Corporation, which is the result of suggestions made by Sir Chas. Sykes, the member for Huddersfield, a prominent woollen manufacturer, and formerly director of the department of Wool and Textile Production, while associated with him in this organisation is Mr. E. F. Hitchcock, who was deputy-director of the department. The organisation proposes to assist the Government in benefiting the whole trade, and one of its methods for reducing stocks is to adopt a system of barter, thereby being of service to other trades, and creating a central organisation to act as a sort of clearing house both for raw material and manufactured goods and fqr arranging credits,, besides keeping Britain well posted with all matters bearing on the export trade, and opening up new markets. The underlying principle is somewhat akin to that of the Australian wool realisation scheme, only that it has a far wider scope, especially in the direction of ascertaining what classes of goods are required by the people of the (various nations where the organisation is at work. The scheme certainly fills a great gap that has hitherto ex-' isted, and it is quite conceivable that if it is worked out on good business lines it will prove of immense benefit to exporters and consumers, and a valuable factor in developing British trade.