Foreign News: Quids & Quos

Twelve bright red pens stuck out of twelve black inkpots on a table in the aisle of Canada’s House of Commons one morning last week. At the head of the table sat Canada’s large, solid Premier Richard Bedford Bennett, flanked by the two other members of the triumvirate which British newspapers have called “The Busy B’s”—Rt. Hon. Stanley Baldwin and Australia’s former Premier Stanley Melbourne Bruce. Down the table were former Premier Joseph Gordon Coates of New Zealand, Sir Atul Chatterjee of India, Premiers Frederick Charles Alderdice of Newfoundland. Howard Unwin Moffat of Southern Rhodesia, Nicolaas Christiaan Havenga of South Africa and Vice President Sean Thomas O’Kelly of the Irish Free State. Before them were twelve bundles of closely-typewritten paper representing twelve bilateral trade agreements over a five-year trial period—the result of four weeks of haggling and scratching at Ottawa’s Imperial Economic Conference. One by one. smiling woodenly, the delegates signed.

Like a prestidigitator, Mr. Bennett produced a blue bag from his coat tails. Out of the bag came a big silver plate. Mr. Bennett handed it to Mr. Baldwin. Mr. Baldwin took out a red silk hankerchief. polished the plate carefully, slowly. A boy came in breathless with another blue bag containing another big silver plate. This plate Mr. Baldwin presented to Mr. Bennett. Mr. Baldwin then made a speech praising the weather. Mr. Havenga made a speech pointing out that nobody was under the illusion that he was going home with everything he wanted. Mr. Chatterjee made a speech inviting all the delegates to go to India. Chancellor of the Exchequer Neville Chamberlain, No. 2 British delegate, issued a statement. Mr. Bennett apologized for “being impatient and intolerant.” Mr. Baldwin grinned, looked at the clock.

A messenger buzzed in with a cablegram from the King. The delegates stood up. Galleryites craned their necks, whispered: “Is O’Kelly up?” Mr. O’Kelly was up, smiling tiredly. In a loud voice Mr. Bennett read the cablegram:

“I appreciate very much the message which the representatives. . . have sent me on the termination of the Ottawaconference. The Queen and I thank them all. . . . Your work has been arduous and intricate, but I rejoice to think that your achievement has justified the high expectations with which the conference began. . . .

“GEORGE R. I.”

With souvenir green leather folders stuffed with postage stamps in their pockets, the delegates rushed off to catch trains and boats. Not until two days later was the Press told what Messrs. Bennett, Baldwin, Bruce et al., and King George, and the people of Argentina, Denmark, Russia and the U. S. had got out of the conference.

What They Got. Premier Bennett, shrewdest haggler of them all, went into the Conference with one supreme determination—to get from Britain the right of free entry for all natural products of the Dominions. Great Britain’s tariff law enacted last March had imposed duties against foreign goods with the provision that these duties could be applied to the Dominions after next November. Mr. Bennett wanted a market for Canadian wheat, dairy products, poultry, lumber. Mr. Bruce wanted a market for Australian frozen meat. For this pair poky Mr. Baldwin was no match. Before they were through with him Britain had committed herself to five years of free entry for Dominion foodstuffs (except the Irish Free State’s) at the expense of tariffs against the rest of the world’s foodstuffs.

To get his wheat into Britain profitably Mr. Bennett needed two things: 1) a preferential tariff; 2) protection against “dumped” Russian wheat. The first was not easy but it was against the latter provision that Mr. Baldwin and his colleagues fought longest and hardest. Russia is a good customer of Britain for manufactured goods. She must sell Britain something to have money to buy those goods. Finally Mr. Baldwin promised that Britainwould prohibit the entry of any state-controlled commodity sold so cheaply as to destroy Dominion preference (i. e. at less than world prices). Mr. Bennett wanted the word shall used in the pledge. The British stubbornly held out for will. Cried British Delegate Lord Hailsham: “What do you think we are? Thugs whose word cannot be taken?”

The British quids and Dominion quos of the agreement signed:

Great Britain—Canada. Quids: 1) free entry for five years to all Canadian products now duty free, reserving the right to impose duties after three years on dairy products; 2) preference to Canada by imposing duties on foreign dairy products, certain fruits, unwrought copper (2d. a lb.), wheat (25. a quarter, or 6¢ a bushel); 3) continuation of the 10% ad valorem duty on foreign timber, zinc, lead, asbestos, fish (Canada had wanted the tariff on timber increased); 4) a ten-year extension of the preference on Canadian tobacco.

Quos: 1) preference to 220 British commodities (including textiles, iron & steel, chemicals, leather) through free entry, lower preferential rates or increased tariffs on foreign commodities; 2) abolition of surcharges on British goods “as soon as the finances of Canada will allow”; 3) a promise not to increase duties on any British goods without recommendation by its Tariff Board, with Britain granted audience before the board.

Britain reserves: the right to remove its tariff on foreign wheat, copper, zinc and lead whenever Canada cannot supply them at world prices.

Great Britain-Australia— Quids: 1) Free entry of frozen meats for one year, provided the imports do not exceed those of 1932. 2) Tariff preferences similar to those granted Canada on wheat, dairy products, fruits, copper, zinc, lead and asbestos, wines.

Quos: 1) Unspecified preferences to British manufactured goods. 2) “Reasonable competition” with Australian industry.

Great Britain-India. Quids: Increased preferences on carpets, rugs, hides, jute, sandalwood oil and cotton.

To all Commonwealth countries except Ireland, Great Britain grants free entry of all natural products, preference on others through tariffs on foreign goods.Canada’s agreements with the Irish Free State, South Africa and Southern Rhodesia provide for mutual preferential tariffs.

The Losers. In 1930 Canada imported $600,000,000 worth of goods from the U. S. The U. S. bought $400,000,000 from Canada, not counting the great imponderableof tourist trade, estimated at $50,000,000 in a normal year. Last year U. S. exports to Canada climbed to $1,100,000,000. Mr. Bennett promises to divert some 50 to 100 millions of this from the U. S. to Britain. The U. S. may expect to lose some of its $81,000,000 trade in iron & iron products. $30,000,000 in coal, $20,000,000 in chemicals, $12,000,000 in electrical apparatus, $3,000,000 in glass & glassware. That some of these products were not mentioned in the published summaries was taken to mean, not that they were omitted from the agreement, but that Canada wanted to avoid lobbying in Parliament and an inrush of goods for sale. U. S. motorcar manufacturers were delighted to learn that no agreement was reached increasing the “Empire content” of assembled products (in Canada, 50%; in Britain, 25%).

To offset some of these losses there emerged from the conference one proposal that heartened U. S. manufacturers. The day the meeting closed Delegate O’Kelly despatched to a newspaper friend in the U. S. the following offer:

“The Irish Free State Government would be happy to do anything in its power to increase trade with the U. S. We could offer a considerably larger margin for American iron and steel goods, wheat, maize and fruit for example. . . .

“The imports of the Irish Free State from the U. S. last year amounted to about $8,000,000; in 1930 to about $19,000,000. . . . U. S. purchases from us in 1931 were about $1,500,000 and in 1930 about $5,500,000. . . . There will always be a large volume of goods which we must import and we are prepared to give special encouragement to the importation of these goods from countries which agree to grant corresponding advantages to our export trade.”

Argentina will lose through British preference to Australian meat. Russia may not like the dumping clause, but it was freely whispered at the conference that Russian objections had been silenced by a promise of a sizeable British loan.

Results. Britons were bewildered by the agreements. Liberal and Labor newspapers pointedly asked what the British consumer would get in return for the higher food taxes. Old George Lansbury, Laborite leader, announced he would fight ratification with what was left of his party. Lord Beaverbrook, the Canadian-born owner of the Daily Express, for years an advocate of Empire Free Trade, was delighted. Said the Express: “Credit goes supremely to one man, Bennett, whose sincerity and patriotism won for him the sneers and venom of a considerable section of the British press.”

Premier Bennett had driven such a shrewd bargain that he expected but half-hearted opposition from Mackenzie King’s Liberal Party. Other countries were expected to ratify. Delegate Neville Chamberlain seized the occasion of the signing of the pacts to announce that Britain would not return to the gold standard until War Debts and Reparations have been finally settled. Sad-faced Sean O’Kelly, who went home without any agreement with Britain, had helped the Irish Free State by making fast friends of all the other delegates. The other delegations hid four weeks’ accumulation of bitterness under polite smiles. Aside from the agreements, the conference had proved 1) that other countries of the Commonwealth would no longer take dictation from Britain; 2) that the Commonwealth is not, and never will be, self-contained.