Has British trade a future? (1926)

From the November 1926 issue of the Socialist Standard

A month or two back Chiozza Money wrote a series of articles for the “Daily Chronicle” on the “World Race for Trade.” On May 21st, he describes a visit paid to Sheffield where he inspected Cammell Laird’s works. He found that the efficiency of these works was equal to anything he had seen in America, and yet there is any amount of plant idle, in some instances the works were only working at half capacity.

In dealing with this question of idle plant, he makes the following observations :

It all comes to one word—Markets. There are the Dominions and India, but they are markets not reserved to us. Moreover, in 1926, the world is out of joint. We have to wait for better times. That those better times will come we may rest assured. The world must, sooner or later, need a much greater supply of iron and steel than it now calls for. The efficiency of Sheffield will not always go unrewarded. 

Now it is all very well to “rest assured,” but it is much better to know a little of the possibilities of the assurance being well-founded.

In a further article on June 7th, he says :

Foreign competition is increasing and will increase. The expanding markets for which we may legitimately hope will demand less of crudely manufactured and more of artistic productions. Intense and growing foreign competition will make it necessary for British exporters to increase their efforts, and for British manufacturers to adopt every good economic device.

He then goes on to urge that trade unions should welcome the adoption of the best-known machinery and improvements in methods of work. He tacks on to this the well-worn recommendation for a friendly co-operation in economic endeavour between employers and workers.

He makes three main points : (1) that a world-wide expansion in trade is coming shortly; (2) that if English manufacturers reduce their costs of production they will get a large share in it; (3) that an increase in trade makes it possible for the workers to claim a larger share of the product.

We will take a few quotations from different sources that have a general bearing on the questions raised.

As Chiozza Money has concerned himself very much with America, the following quotation from the “Christian Science Monitor” is very apt. We quote it at length, as the points raised are so interesting.

Absorption of surplus production presents one of the outstanding difficulties of the American manufacturer according to Alvin K. Dodd, of the Department of Domestic Distribution, Chamber of Commerce of the United States, speaking at the thirteenth annual convention of the Society of Industrial Engineers here [Philadelphia].

The former necessity of meeting the existing demand has been succeeded by the question of making a demand for the over-supply, he said. Growth in population, he continued, is only about 16 per cent. above that of 1913, and, if we accept 30 per cent. as the increase in facilities, for manufacture, a capacity exists seriously in excess of what might he called the normal demand on pre-war rate of production.

The result of this is seen, he declared, in exaggerated forms of competition, extraordinary displays in advertising, extraordinary costs, unusual growth in methods of distribution, and. finally, the latest expedient, instalment selling which is not appeased by anything less than the payment of next year’s income for this year’s product.

With the situation of America as stated above, unable to get rid of a large excess of production, and itching to find fresh outlets for her goods, the race for the satisfaction of the possible expanding market ingoing to be keen.

Let us take another quotation.

Walter T. Layton, Editor of the “Economist,” makes a contribution to the discussion in the “Manchester Guardian,” of April 20th last, from which we take the following extract :—

In these circumstances are we most likely to find the much-needed expansion of our foreign trade in the markets of Europe or of the Empire? It must be admitted that the prospect of attaining free trade within the Empire or of making it self-sufficient is not very promising. India, which is much the largest of the Imperial markets, is evidently determined to maintain some measure of protection against British manufactures. Canada, whatever may happen in the political field, is destined to come increasingly within the economic sphere of influence of the United States—a significant sign of which is the fact that Canadian enterprise is no longer financed mainly from London, but from New York. Even Australia is determined to foster her iron and steel, textile and other industries and to keep out British goods as fast as she can replace them at home. The ties of Empire are very real and lasting ones, but no one can look at the map of the world and truthfully say that the British Empire is a natural economic unit or that Great Britain. can find a complete outlet for her economic activities in the Empire.

According to the above, and the source should be authoritative, the Empire does not hold out much hope to the English manufacturer in the event of a general expansion of trade.

Let us go farther afield. Let us probe into the condition of the Eastern lands of mystery and hope, and see what prospects for the European manufacturer exist there.

Japan has learnt much from the West, and turned her knowledge to good account. The “Osaka Mainichi,” June 30th, 1926, has an article on Japan’s growth in prosperity from which we take the following information :—

In 1887, eighty-four per cent. of the foreign trade of Japan was handled by foreign merchants. Of the imports, eighty-five per cent. was handled by foreign firms. During 1894-5, the native firms commenced to increase in activity, and by 1900 they handled thirty-five per cent. of the exports and thirty-nine per cent, of the imports. The Russo-Japanese War of 1904-5 was a great impetus for an enormous expansion of the foreign trade of Japan, and the increasing influence of Japanese traders. But the Great War of 1914-18 was the real opportunity of the Japanese merchants.

Taking advantage of the world demand for silk and cotton piece goods, more than 10 Japanese firms went to the extent of establishing their branches in Wall Street and Madison Square, where almost prohibitively high rents were demanded, and conducted their business, paying high cable rates. The activities of the Japanese merchants then alarmed the Americans, who may be generally classified as amateurs in foreign trade.

The Japanese view of the American foreign traders is worth noting. “Amateurs” ! !

Of late years there has been an enormous development in trustification. The slowing down of European manufacture for foreign markets and for ordinary products in the home markets gave Japan her chance. There was an enormous expansion in Japanese manufacture and trade, and a wild scramble among the producers. Small firms grew rapidly and joined with large corporations.

The post-war panic and the following years of depression caught many of the Japanese corporations in the swirl. Some were driven into bankruptcy along with many private firms. Later, when things were on the mend again, the tremendous earthquake gave them a further set-back. Since the earthquake, things have steadily improved, and Japan is turning greedy eyes abroad for an outlet for her surplus population and surplus goods. At the present date the bulk of Japanese foreign trade is handled by native merchants. The trust companies have greatly developed, and are preparing a stronger attack upon the markets outside of Japan.

The Japanese have learnt other things, besides manufacturing and trading, from the West. They have learnt how to cover commercial aspirations with a halo of sanctity, as witness the following quotation from the Editorial in the paper mentioned above :

We repeat here that the object of overseas expansion of a nation is to open up the natural resources of the undeveloped lands, and to spread the civilisation in uncivilised regions. Any country which contravenes this common principles of humanity should at this opportunity realise the fundamental mistake of shutting the doors of the country to foreigners.

Japan’s neighbour, China, could say a lot on the first part of the quotation, while the last part is a knock at Russia, for “In Asia, there is a vast undeveloped territory of fertile soil in Russian Siberia” !

The harbour facilities of Japan have been greatly improved lately, and the number of ports open to foreign trade increased up to forty-one, of which by far the most important are Yokohama, Kobe and Osaka.

The way the Japanese set about capturing foreign trade is German in its thoroughness. The following quotation will illustrate how they do it :—

The Foreign Office has decided to send Mr. Vakichiro Suma, one of the administrative officials belonging to the Office, to East Africa by either the Asama or the Yakumo of the Japanese Training Squadron, which is to cruise along the East African coast via Turkey, Malta, Marseilles, Barcelona, and Cape of Good Hope, for the first time.

Gilmac.

(To be concluded next month.)