Co=operation Against Aggressors

Waikato Times, Volume 124, Issue 20821, 3 June 1939, Page 15 (Supplement)

Co=operation Against Aggressors

(Arthur S. Baxendale, British Financial Expert.)

IT IS POSSIBLE, I believe, to achieve an international union or accord which could act concertedly to bring an aggressor nation to heel, by closing markets to such a nation. What follows outlines a plan whereby parties to such a concord of a council of action could be provided with the necessary powers needed for stopping imports from a State adjudged guilty of aggression or of disturbance of world order. A tone of greater assurance with reference to the outcome of economic, as compared with military, action is justified by the fact that reliable data regarding the economic factors involved are available to all, whereas the military strength of the parties engaged, or likely to be engaged, in conflict, is largely a matter of surmise dependent for its accuracy on the success of the bluff and on the secrecy of each and every party concerned. In my opinion, if Germany, Italy, or Japan were adjudged aggressors and came under the proposed ban, the only course the other parties to the “ Berlin-Rome-Tokio” axis could, in the light of reason, pursue would be to use their whole influence to induce the delinquent State to submit to the decision of the World Court before that State had lbst its value as an ally. Non-observance of the ban would not materially help the delinquent, while by incurring the ban the other partisans would ensure their own economic ruin, and while the rulers of to-day may be as willing as were their antecedents to sacrifice the lives of their countrymen in any quarrel, modern rulers would be less likely to shoulder the responsibility of ordaining Incalculable Losses of National Wealth. It would seem that the untoward effect on the German international trading position as the result of acquisition of Austrian and Sudeten territory had, surprisingly, not been anticipated by the German Government. Had these acquisitions been gained as the result of a destructive war and the suggested ban been applied, Germany would, even with the fullest support from Italy and Japan, have before long been in much the same condition as in 1919 and willing to accept any terms that might be imposed as the conditions under which the ban would be lifted. It may be suggested that the Balkan States would not dare to observe a ban against Germany for fear they would, in consequence of so doing, suffer from an aerial bombardment by that country. The most recent German estimate—January, 1939 of the greatly increased trade between Germany and the South Eastern States of Europe shows that 13 per cent of Germany’s exports are now marketed in the Balkan States. It is hardly conceivable that the German rulers would in actual fact bomb halfa-dozen countries —thereby incurring incalculable penalties (for reparations)—on the chance that they might gain markets for a quite insignificant proportion of German exports that would necessarily be either exchanged for bartered goods or paid for by money banned in all the great money markets. While there is general agreement as to the overwhelming force of economic factors in relation to World Power, there is some doubt as to the possibility of effective application of the full strength of this force in the service of World Order. This doubt has been raised by the failure of lax and partial application by the League of Nations of so-called “economic sanctions” to do more than aggravate ill-feeling. The failure to attain effective application of one form of economic action should not be accepted as proof that all forms of economic action will fail. The powers of the Council of Action would be:— (a) To appoint a Judicial Court to decide whether aggression or subversion of intei*national order has taken place; (b) to declare a ban against any State adjudged by the Court to have been guilty of offence against international order; and (c) to enforce observance of the ban by its extension to any State (whether a party to the Concord or not) that fails to apply the ban. The Council would have power to lift the ban as soon as the delinquent has withdrawn its army of occupation (if any) and paid reparations, as calculated by an Assessment Committee, and has In All Respects Made Amends. In case the delinquent State is unable to pay in bullion or acceptable international securities the full amount of the assessed damages—a special import tariff would be applied by all States to imports from the delinquent States—the duty to be credited to a Reparations Arrears Account. (This stipulation is rendered necessary to prevent the standard of living being universally lowered by under-cutting world prices on the part of the delinquent State.) The ban against the delinquent States would apply to all its trade and means of communication, not because of any necessity to strengthen the devasting effect of the ban on its exports, but because of the obvious impropriety of supplying aid in any form to a convicted aggressor. The penalty on a State that failed to observe the ban need only be the closure of world markets to the exports of such a State. The difficulty of maintaining peace and of securing united action for that end has been greatly increased in recent years by the intensification of international political bias. If there were ever a time when unanimity of view could be attained in an assembly of delegates ap-

Concord of Nations : : No Imports from Offenders

pointed to represent governments of all political complexions on the rights and wrongs of international disputes —that time has passed by. Delegates are, and must De, appointed to represent a country on the implied understanding that they will, before any other consideration, support the interests of that country and particularly of the party to which delegates owe their appointment. On the other hand, there is no reason to believe there would be greater difficulty in the selection of impartial judges capable of weighing evidence for and against countries other than their own, than there has been m the past when arbitrators have been Appointed to Settle International Differences. If a State were banned, the implications of world ostracism would, as will be shown later, be so disastrous after a few months that its well-wishers would spare no effort to induce the banned States to make instant submission to the Concord. No States would make more strenuous efforts in favour of such submission than those whose form of government was most akin to that of the adjudged delinquent, since prolongation of the ban would involve disastrous debilitation of a State of their own political faith. No practical alternative to advocacy of submission -would be open to such partisan States. Military aid would avail only in destroying markets, while by defying the Council of the Concord the partisan State would itself incur the ban, with the result that its goods would add to the jointly owned stock of unexportable exports. The reason for attaching greater importance to the closure of markets to exports from a delinquent State rather than to cutting off its supplies are fourfold: Firstly, a prospective delinquent can make provision in advance for the loss of imports but cannot do so )for the loss of markets; secondly, scarcely any sacrifice is required of an importer when required to buy in a new market, whereas a considerable sacrifice would be demanded from exporters in Concord countries when prevented^from taking advantage of markets they had established at considerable cost in time and trouble; thirdly, much greater employment in delinquent States will be caused by banning their exports than by stopping their imports; and, fourthly, by Closing the Markets of the World to exports from any State, its currency will have virtually no foreign exchange value. It would be almost impossible to overrate the importance of its export trade to any highly industrialised country. It is said, and possibly believed by some people, that as less than one-tenth, say, of the manufactures and produce of a country are intended for export, only one-tenth of its workers are dependent on export trade for their employment. As an example of the effect an exceptionally heavy fall in exports has on employment where export trade per head of population is only about one-third of that of Britain—the case of the United States is instructive. In 1929 the gross value of exports and imports was 9,198,000,000 dollars. In 1932 it was 2,933,000,000 dollars. Exports fell from 5,128,000,000 dollars in 1929 to 1,611.000,000 dollars in 1932. According to the American Federation of Labour figures, the number of unemployed rose from 1,864,000 in 1929 to 13,182,000. Though there were contributory causes that aggravated and prolonged the “American crisis,” the reduction in export trade was its main cause. Germany now seems fully alive to the vital importance of export markets. The launching of a new “fouryear plan” has been rendered necessary by this paramount need of increased export trade;- the need having been accentuated by the addition of Austrian and Sudeten markets from active markets for German exports that were paid for with foreign currency, to inactive home markets using German money. The full effect of a ban would, of course, not be greatly felt until after demobilisation. So long as the war industry offers employment for all, the loss of other forms of employment is immaterial; therefore the easier and quicker an aggressor effects his military conquest, the sooner will his submission be brought about by economic means. Radio would give extremely important aid in Hastening the Demoralisation of a Nation under the ban. Daily radiocast bourse quotations of the continually falling value of the currency of such a State, and statements regarding the placing of trial orders with parties to the Concord for goods ordinarily obtained from the banned country, would keep the commercial and industrial community well informed as to the price that would have to be paid for replacement of essential exotic goods and also as to the probable permanent loss of valuable trade. The incident of the ban would fall with exceptional force on any aggressor State depending greatly on its income from ocean-going shipping and “tourist traffic.” The assistance of the smaller Powers in application of a ban would be invaluable. It seems highly improbable that the markets of the non-co-operating States would be able to afford markets to other non-co-operators that would compensate, except to an insignificant extent, for the loss of the numerous and wealthy markets of the co-operating States—therefore to decline co-operation would entail loss to almost the same degree as that which would befall the “principals” engaged in the disturbance of World Order.