Herinneringen en dagboek (3 delen)

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Bijlage 15

26 October 1929

Nota-Heldring ter Parijse conferentie der Internationale Kamer van Koophandel
(vgl. p. 822)

There is general agreement as to the unsatisfactory economic state of Europe notwithstanding an undoubted improvement on the continent since 1924 which has been due chiefly to the stabilisation of statefinances in many countries. There is also pretty general agreement as to the hampering effect on a further development of Europe of the existing barriers between European countries, but there seems to be no such agreement as to the degree of obstruction which they exercise and as to the urgent need of their removal. Some think that they ought to be removed as quickly as possible, others that they cannot be missed as a means of protection of existing industries and, indeed, importduties have been or are being increased here and there, notwithstanding the recommendations of the Economic Conference of 1927, either to protect industry or to meet agrarian interests which suffer both from the cheaper agricultural production elsewhere and from the effect of protection of industrial products as manifested in the rise of their price level.

There is also a widespread fear of the influence of American competition, all the more as Europe is the debtor of the U.S. and wishes to pay her debt and interest in the most natural way, that is in commodities and services, but finds this process obstrued by very high duties and intricate formalities accompanying importation into the U.S. It is feared that unless the American trade balance becomes passive and the United States abandon their efforts to diminish their importation from Europe and force up their export of finished products, they will have to go on extending their credit and, the amount of credit being necessarily limited, will gradually absorb the European Industries. It is pointed out that this process is already noticeable in many cases where America has acquired part or even the majority of the stock capital of certain industries.

The announcement of further increases of the U.S. tariff has caused a deep reaction in Europe and European minds have been made to look upon the existing but somewhat utopian-looking scheme of an European economic entente as a proposition which it is time to thoroughly examine. American business recognizes the necessity of such a step and is sympathetic as it may

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ensure a greater wellfare of Europe and the development of her purchasing power by which non-European countries can only benefit.

If we exclude the war as the chief and irremediable cause of the impoverishment of Europe and we compare Europe with the U.S., we think that it will generally admitted that the latter country owes its prosperity to a very large extent to the immense freetrade area which exists behind its tariff wall. Opinions may differ as to whether this tariff wall will be in the long run to the good of the country, but it is not doubtful that the presence of an enormous territory peopled by some 120.000.000 inhabitants in which no internal boundaries and differences in coins, weights, measures and languages exist and goods can circulate freely, creates a market for the home industries which exceeds in importance anything that is found in Europe, Russia excepted, in which country social and economic conditions are very backward. But these Russian conditions show that something else than a freetrade area is necessary to economic development and there can be no doubt that if the American labourers did not present on the whole a selection of energetic forces emigrated from Europe (or descendants of these forces) with the strong desire to reach a better standard of life, the success of America as an economic unity would be less remarkable. Also, the desire to work is continually stimulated by the possibility in view for everyone, however modest his beginnings, to arrive at the highest step of the ladder. Finally the abundant natural resources and favourable climatic conditions of the country have been fundamental in securing the basis of success, but in this respect Europe is scarcely less favoured by nature. Nor can it be said that people of Western and Central Europe are technically and intellectually the inferiors of the American, but they have not the same strong faculty of initiative and impulse to rise higher in their social surroundings owing to historically grown conditions, limited outlooks of promotion and the absence of the assured feeling that his country can do better than any other, which is a very important psychological factor with the American worker. No removal of barriers would bring about with the European the notion that he is first of all a European as the American feels that he is an American. He would continue to feel first of all British, French, German, Italian etc. However, there are other considerations which make the gradual lowering of these barriers extremely desirable, although the partisans of cartelisation are inclined to put them in the background.

Let us first consider their arguments.

The object of cartelisation is to do away with unnecessary and ruinous competition in certain industries, both within the borders of a country and internationally, by establishing quota of production for each party to a convention and by regulating prices. It is a legitimate object, as long as itdoes not create unbearable conditions to the suppliers or customers of cartels. But cartelists also pretend that such a convention strengthens the position of industries to much that it renders the establishment or maintenance of importduties unnecessary in many cases. This view, however, is decidedly too optimistic, for it has been found among other things by the investigation of the Economic Committee of the League of Nations that cartels are often dependant on a certain level, and sometimes a high, level of importduties.

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Apart from this aspect of cartelisation there are other objections from the point of view of consumers whose purchasing power it is desirable to increase. However unevitable or sometimes useful cartelisation may be from the industrial point of view, its chief object is to secure to the industries the largest possible profit and not to ensure lower prices to consumers, as it is necessarily the result of the reduction of importduties. In passing it may be observed that it is for this reason that the labour representatives wish to place international cartels under the supervision of some industrial body, possibly the League of Nations. In any case it would seem that if governments were induced to advance the international cartelisation of industries very strong support would be given to those who aspire to the socialisation of industries.

Furthermore cartels do not favour the free choice of consumers and the free circulation of goods, but tend to bring about their geographical distribution according to the will and interests of producers. Finally it should be remembered - and this seems a very important argument against cartels as being the panacea for our economic troubles - that their field is restricted to certain important articles and hundreds and thousands of commodities, among which most of the products of the soil, will never be comprised. The tradebarriers problem would therefore remain for these commodities even if it were proved that for other articles the obstacles could be removed by international cartels.

Cartels not being the remedy for the European sickness, is there any other but the lowering of tariffs? Is their raising an efficient means to improve the economic condition of Europe? It may certainly help certain branches to tide over a difficult period, but in Europe it cannot be of lasting benefit, as the chief cause of the trouble: high cost of production owing to small internal markets and the obstruction of sales across the border is not removed by further increased tariffs.

Industrially underdeveloped countries with sufficient natural resources may protect industry to a certain extent and improve the general condition of the country thereby, but the human tendency to demand state help, whether really required or not, plays its part and protection soon becomes overdone. The smaller or the less populous a country, the smaller its internal market and the more harmful this process is.

As to agriculture, which is in a particularly bad way, it is claimed that agricultural conditions in some European countries render the raising of duties to weaken the effect of foreign competition unavoidable. Prices of agricultural produce will undoubtedly rise of the contemplated measure is resorted to in say country A., possibly even to the extent that dumping - as with the industrial products - becomes possible, but the cost of living and wages of the industrial worker and consequently the cost of production of the industry in that country will rise correspondingly, having a damaging effect on its competitive power both within and outside its frontiers. Fresh increases of industrial duties are likely to follow and the position of agriculture will soon be the same as before. Meanwhile the countries whose export of agricultural produce has been impaired by the raising of agrarian importduties by country A. may have reacted by increasing their duties against

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some of the important exportarticles, either industrial or agricultural, of that country. This must mean another prejudice to that country, which had hoped to further its agrarian interests by raising agrarian duties, but finds its general economy, agriculture included, adversely affected. The solution for agriculture is not be found in protection but in developing the inter-European marketing possibilities, in educating the farmer so as to give a reasoned judgement in selecting the best paying crop, a clear insight in the value of scientific methods and of cooperating with his fellowfarmers in order to economise on his cost of production and selling and to give him the largest possible interest in his soil.

Last of all no one will deny that the perpetual international tariff hagglings are continually undermining the growth of peaceful disposition among the nations of Europe.

All this is an old story, but I may be forgiven for retelling it, the more so as I have seen in my country a very remarkable development of industry in my lifetime taking place under a system of no or very low duties and simultaneously a hardly less remarkable development of agriculture notwithstanding steadily increasing difficulties of export of Dutch products owing to raising tariffs abroad. Both industry and agriculture have continually adapted themselves to ever changing conditions, which have stimulated the energy of producers to devise means to reduce their cost of production and to improve the quality of their articles. Notwithstanding pretty high money wages the cost of production in Holland is in most cases not higher than in other countries and there is nothing artificial about the existing prosperity. True, some industries have gone to the wall in the course of time, owing to foreign circumstances, but they have been replaced by other more prosperous ones. That has proved to be profitable in Holland ought to be more profitable for a group of contries, provided the change is brought about by proceeding gradually so that the economic structure of each participating country has time to adapt itself without great shocks to the modifying conditions.

Even if we should come to the conclusion that the ultimate object should be to make a freetrade area of Europe, the fiercest freetrader should be aware of the impossibility of bringing about this state of ultimate happiness at once without unsettling the whole fabric in almost all states of the Continent and causing widespread ruin. I think it well to emphasize at once the necessity to proceed by degress in lowering existing barriers and to obviate thus also the fiscal objection. The revenue of the states is partly based on import duties. By abolishing or reducing them too sharply the financial equilibrium of a state may be upset. By staging the reduction the revenue is likely to recoup itself by the yield on increased imported quantities as the protective effect diminishes and the purchasing power increases. The question whether the revenue lost by decreasing importduties should be replaced by direct taxation would be irrelevant until such time as the duties have become purely fiscal in character. We need not examine it anyhow for the present, provided reductions are to take place gradually.

As to the method of lowering tariffs, the Economic Committee of the Leage of Nations has tested various systems and practically rejected them

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all, although it is officially still engaged in investigating the possibility of lowering the duties for certain named commodities. Very little hope can be hold out that this investigation will be crowned with success, as the existence of more or less high tariffs in Europe demands the setting off of one concession against the other, which will hardly ever be possible for one and the same commodity in two different countries. You may get country A to consent to a reduction of steel, which it buys from country B, provided country B reduces the duties on wine, fruit or flour which country A wishes to export, but it is hardly to expect that steel can be compensated by steel, wine by wine, etc. Anyway, an arrangement embracing many commodities would not be obtained by this method. The only practical way seems to be to get a number of states having high tariffs and whose geographical situation renders an entente natural to negociate on the lines suggested by Mr. Riedl: special tariff reductions brought about by negociation or possibly in some cases by staged allround reduction of a certain percentage (5 or 10% per annum?). As his suggestions have been very clearly put down in his memorandum, I refrain from referring to them more fully. A customs-union with one exterior tariff for all countries comprised and freetrade within cannot be contemplated, but an entente of states who agree to gradually lower their duties among each other, extending the treatment of the most favourite nation to all members of the entente and to low tariff- or freetrade states. I beg to draw special attention to the position of this category of countries whose particular claim has also been recognised by Sir Arthur Salter and Mr. Stoppani in their excellent memorandums. As long as these countries do not give up their non-protectionist policy they should be acknowledged to already give equitable treatment to other states and reap the benefits of all concessions to which the negociating countries agree among each other. Unless this is done the liberal countries would be forced to turn away from the entente and fresh antagonism created. This should be avoided just as it is necessary to avoid to give umbrage to the United States and other protectionist countries standing apart by raising present tariffs against them.

It is totally excluded that such an agreement can be universal, at least for the time being, but it should be possible for Europe or at least a group of states in the Western and Central part of the Continent. If it is feasible, the outlook for Europe is extremely black.

In order to create the quiet atmosphere necessary for further fruitful discussions on the subject of a speedy conclusion of the tariff truce (provided it does not bear too much the character of a sieve), referred to in the resolution presented by Belgium, France and Great Britain and adopted by the 10th Assembly of the League of Nations, is very desirable. Otherwise there is likely to be a general scramble for tariff increases so as to ensure a level on which reductions can be generously made without disturbing even the minds of the most violent protectionists.