The Daily News. THURSDAY, DECEMBER 22.. 1921. A CREATIVE EMPIRE POLICY.

Taranaki Daily News, 22 December 1921, Page 4

The Daily News. THURSDAY, DECEMBER 22.. 1921. A CREATIVE EMPIRE POLICY.

Among the proposals of the Imperial Government designed to stimulate British trade and thereby relieve the evils of unemployment which have grown to serious proportions, is an'extension of its export credit scheme and the State backing of loans for capital enterprises calculated to promote employment in the United Kingdom. It should be quite tinneeessary to demonstrate the wisdom of a creative policy in contradistinction to a palliative by emphasising that the former is reproductive, while the latter means that every sovereign spent on monetary relief for the unemployed is a sovereign withdrawn from reproductive investment. It requires no special knowledge of the principles of political economy to comprehend that expenditure on the reconstruction of present industrial conditions will be most noticeable to British and Empire trade in its time of worst depression. What may be termed the fuel of trade consists of orders for goods, so that it is no use to strike a match unless the kindling and fuel are there. It is, as the London Observer aptly contends, for lack of this fuel in the shape of foreign orders that the blaze of British trade has flickered out, hence the welcome that should be accorded to a scheme that, by supplying credits, enables orders for goods to be placed and executed. Though this is an artificial method of stimulating trade it is the only practical way of meeting the depression. Even then it can only be “half a bridge.” The rest of the structure the Government cannot build, though it can do something to encourage others to get building. There are obviously factors on which the success of a scheme of This kind depends for success. Costs of production must be reduced if Britain is to secure her share of the world’s trade, for whatever benefits may accrue from credit schemes, they will be as nothing compared with those to be derived from a lowering of prices to a level Which will enable effective competition in the world’s markets. The system of production must, be rendered cheaper and more efficient by technical improvements and by industrial co-operation for better work at a lower cost per unit. —a move that is much overdue —and the goods themselves must be such as the consumers require, instead of the old-time stereotyped class that proved in many cases unsuitable, with the result that foreign competitors who studied requirements secured the business. A higher

productive efficiency, or alternatively lower wages and profits, together with an enterprising policy of catering for trade on the right lines, is, therefore, a vital necessity of British trade. It is worthy of note that a writer in Barclay’s Bank monthly review recently pointed out that an export credit system does very little to re-create the network of trade relations, which depends on the re-establish-ment of a sound currency, or medium of exchange. It merely promotes an exchange of goods between two individuals or groups. In the present condition of world economics different types of credit are required. There are reconstruction credits, such as loans to insolvent countries to aid them to return to sound finance, but these are considered to be best provided by the Governments concerned by means of guarantees. The type which most nearly conforms with rhe requirements of sound economies, and appeals most strongly to British imagination, consists of loans for Empire development, if only for the reason that British manufactured goods must in the main be sold to countries which can pay for them in foodstuffs and raw materials, while the dominant factor of exchange can be more easily adjusted between countries whose production is mainly complementary and not. competitive. Sir Arthiji'r Duekham, when recently addressing the Ceramic Soeietyj scored strongly when he said: “If, instead of talking of giving credits to foreign traders in the hope of being paid back some years hence, credits were given to encourage trade between the Mother country and the Dominions and Colonies, the results would be much better. Taking the long view of Imperial interests, there can be no doubt of the soundness of credits lor Empire development.” Britain has access on favorable terms to large and relatively stable markets within the Empire, there being vast territories awaiting development. It would certainly be a curious compensation of the war if impoverishment leads to the proper development of the permanent resources of the Empire. Without doubt the clearest and most inspiring of constructive Imperial aims is°revealed in this great, scheme for enabling capital to. be advanced for prosecuting mrieh needed development of resources, and no better use could be made of the money that the Mother Countrycan provide to assist in this great creative Empire policy. Apart from the welcome aid afforded to the Dominions, the opening up of Africa alone could, it is claimed, easily redress the present economic balance of the world.