Empire Runcimanned

(See front cover)

Great Britain hauled down last week the proud, peculiar standard which she almost alone of the Great Powers has flown for the better part of 80 years: Free Trade.

As late as the 18th Century there was no such policy. "Free Trade," in the swaggering argot of desperados, meant smuggling, a crime punished by Death. To Queen Elizabeth, to Louis XIV or George III it seemed as natural to impose the equivalent of a modern tariff or embargo as to breathe. It seems so still to a majority of statesmen. That Great Britain in the igth Century took another line was due to such bold spirits as Thinker Adam Smith, Propagandist Richard Cobden, Pioneer Sir Robert Peel, Statesman William Ewart Gladstone, and to Geography.

Smith to Gladstone-- To Adam Smith, who published his epochal The Wealth of Nations in 1776, occurred the unusual idea that when anything is bought or sold profit accrues to both buyer and seller. Before Thinker Smith and since, the tendency of human nature has been to assume that the seller outsmarts the buyer. Nations try to outsmart each other by selling more than they buy. Each assumes that by erecting a tariff wall it will smartly reduce its own purchases (imports) while continuing to push its sales (exports).

To Thinker Smith it seemed clear that any obstruction to imports reduced the total number of exports and was therefore against the interests of all nations, since in every transaction both buyer and seller profit. To increase the number of transactions and therefore the number of benefits to all, he prescribed Free Trade. But suspicious Mother Britain would scarcely have swallowed this pill-- except for her geography.

Unlike any other Great Power of the period, Great Britain was an island. Her population, rapidly increasing and becoming urbanized because of her Industrial Revolution, began to require more & more foreign food on which Britain's new proletariat preferred to pay no British tariffs. In 1815 this preference became so potent that riotous London workmen chalked the town with their slogan: "Bread or Blood!" Symbolic, a loaf of blood-soaked bread was pitched among Tory landlord M. P.s who upheld the British tariffs (chiefly agricultural) of the day, called the "Corn Laws."

In 1841 the blatant Anti-Corn Law Association led by Propagandist Richard Cobden so alarmed the Tories that Tory Sir Robert Peel was put in as Prime Minister especially to guard their interests. His enlightened "betrayal" of his landlord friends ranks with James Ramsay Mac-Donald's high-minded "treachery" to British Labor (TIME, Sept. 7). In his budgets of 1842, 1845 and 1846, Pioneer Sir Robert whittled away the "Corn Laws," reduced the prohibitory British tariffs on cattle, pigs, meat, cheese and butter. He even lowered the duty on imported stage-coaches.

In 1852, when Benjamin Disraeli became Chancellor of the Exchequer, the principle of Free Trade had become so popular in Britain that he had to curb his will to revive protection. Successive Gladstone ministries made Free Trade the battle cry of the great Liberty Party. By 1879 a Liberal economist could crow: "The British tariff no longer contains within it one solitary shred of protection!"

The whole Free Trade trend had been greatly strengthened from the first by Britain's emergence on the seas as the World's carrier, the nation that had most to gain by free and rapid trade among all nations.

Runciman Paradox-- In London last week came this supreme paradox: Tycoon Walter Runciman, the great Liberal shipping man (Royal Mail and associated companies) whose family stands rooted in the business and politics of Free Trade, was obliged personally to draft and put into effect measures making nearly all manufactured articles liable to a British tariff up to 100% ad valorem. Thus historically he hauled down the standard of Free Trade.

Liberal Runciman's amazing about-face resulted from the fact that Free Trader James Ramsay MacDonald now heads a National Government supported by the largest Tory majority in British history (TIME, Nov. 9). Since the War tariffs have again become a leading Tory policy. Against his will, Mr. MacDonald was forced to appoint as Chancellor of the Exchequer famed Tariff Champion Neville Chamberlain. Next April or sooner, Chancellor Chamberlain will bring in an ironclad British Tariff Act, sure to pass. But emergency tariff measures are in the hands of Britain's obscurest cabinet ministry, the Board of Trade. To keep the Board from skyrocketing tariffs up at once beyond all reason, Free Trader Mac-Donald (still a Socialist), appointed Free Trader Runciman (Liberal) to be President of the Board of Trade. To keep his job President Runciman, cold, thin-lipped and rigidly Northumbrian, had to appease the pro-tariff majority in the House of Commons by some fairly drastic move.

Northumbrians are easily drastic. Calmly Northumbrian Runciman brought in a bill (promptly nicknamed "The Abnormal Imports Act") vesting in his Board of Trade supreme power to issue Orders in Council upping Tariffs for the next six months on "manufactured articles and manufactures" (which in the King's English includes such things as gasoline). Unctuously over the good British signatures of President Runciman and two Treasury Lords, G. H. Shakespeare and A. U. M. Hudson, the Board of Trade declared itself "satisfied" last week that all the articles mentioned in the bill "are being imported in abnormal quantities" (i. e., dumped).

Tariffs Into Law. Though a few Conservatives grumbled that Mr. Runciman had not pledged his Board to up tariffs the full, authorized 100% but to employ "discretion" in every case, the bill passed first, second and final readings in both Houses of Parliament last week by majorities of from 250 to 400, its swift passage being so certain that many M. P.s did not trouble to vote. In vain Old George Lansbury, leader of the puny Labor Opposition, cackled: "There is no ground or occasion for this departure from the established custom of the House of Commons to take plenty of time to consider all financial matters." Less than 96 hours after the bill was introduced it was signed by George V, became law, and unhappy Mr. Runciman began issuing Orders in Council.

That he was really unhappy-genuinely torn in soul and spirit-Free Trader Runciman proved by his own speech during the otherwise perfunctory debate on his bill. As a friend said: "Poor old Walter supplied most of the arguments why his bill should not be passed."

One of the best, as uttered by Tycoon Runciman: "I think we would be very foolish to copy exactly the fiscal policy of the United States of America. . . . Do not let us do here that which would impede the payments which we receive from abroad. ... In the United States that may not do them much harm. That is for them to decide, not us. ... We . . . must not altogether close down the means whereby these remittances reach here. I am expressing my own opinion and others may express theirs if they like."

World Significance-- European statesmen (including British) have belabored U. S. tariffs as a cause of World Depression, have charged that by curtailing the volume of world trade, U. S. tariffs have helped to make it difficult for Germany and Europe to export enough to pay Reparations and War Debts from their profits. This much is certain: The Runciman emergency tariffs will deal a major blow to the exports of Germany and Russia, a minor blow to U. S. exports (not to mention others), and may throw further out of gear the already groaning mechanism of Reparations and War Debts (see p. 19).

Most U. S. exports to Great Britain consist of raw materials and foodstuffs. These are untouched by the emergency Runciman tariffs decreed last week. In 1929, the latest year for which trade figures are complete, U. S. exports to Britain totaled 5,000,000 of which only $18,600,000 were goods now liable to the Runciman tariffs.-- Germany, on the other hand, exported $334,453,953 to Great Britain in 1929. of which $282,071,508 would not be Runcimanned; Russia exported $126,329,245 of which $33,507,294 would suffer. This Christmas for the first time "cheap" toys Made in Germany will be relatively dear in British toyshops.

British Dominions, of course, will receive a 100--70 rebate on the Runciman tariffs thus escaping them completely. It appeared last week that goods manufactured by U. S.-owned plants on Empire soil would similarly escape. In the past eight months U. S. citizens have bought 154 new factory sites in Great Britain, and 500 U. S.-owned or leased factories were humming last week in the United Kingdom.

Runciman Moderation. What escaped some observers last week was the real moderation of Mr. Runciman, Mr. Shakespeare and Mr. Hudson in drafting their Orders in Council.

These orders, effective Wednesday, Nov. 25, upped the tariff on several hundred articles (all of interest to U. S. exporters have been enumerated) not by 100% as the Board of Trade was entitled to do, but by 50%. In Washington the sky-high altitude of the present U. S. tariff, with ad valorem duties running up to 80% and exceeding 50% in most cases, was admitted last week to be so great that further upping in ''retaliation'' against Britain would be impracticable. What many a Runciman in the Empire hopes is that temporary British tariffs will force U. S. and other tariffs ultimately down, will lead to an international tariff truce which of course would be Free Trade.

* The same pill is prescribed today every time the International Chamber of Commerce meets (TIME, May 18), was most notably prescribed at the World Economic Conference in Geneva (TIME, May 16, 1927, et seq.). Said Conference Chairman Georges Theunis of Belgium: "The exchange of products between persons of the same country or of different countries is normally to the advantage of both parties; the greater the range of exchange of different products between those who by their resources and capacities are best fitted to produce them, the greater is the general economic advantage. . . . International trade is normally and properly not a matter of victory and defeat, of profit of one at the expense of the other, but of mutual benefit."

* The $18,600,000 breaks down thus: $3,536,482 worth of paper manufactures; $3,298,503 typewriters; $1,881,390 hand tools other than agricultural; $1,477,452 vacuum cleaners; $768,409 silk hosiery; $729,316 metal furniture; $652,695 vanishing creams and toilet preparations: $631,186 radio sets: $582,910 woolen manufactures; after which follow lesser quantities of toilet soaps, linoleum, oilcloth, leather gloves, rubber soles & heels, dental creams, etc. etc.

Major Exceptions: Motorcars, of which the U. S. exported $5,000,000 to Great Britain last year, are unaffected by the Runciman tariffs, but continue liable to the 33//3% McKenna Duties, a British experiment with tariffs which has been going on since the War in exception to Britain's general policy of Free Trade.

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