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Or, to take another definition, dumping has been defined as selling goods in a foreign country at a lower price than in the country of origin. Here the acid test is changed from the cost of production to the selling price. In one respect this is a distinct improvement. The cost of production is a somewhat nebulous and vague term. It needs definition, and the attempt to discover and assess the varying costs of production would involve the creation of endless committees of manufacturers, accountants, and civil servants-an extensive administrative machine, the maintenance of which would be a big standing charge on the industries of the country as a whole. But selling price is something definite and concrete. It can be discovered at any time, particularly in a country with centralized markets and organized industries. However, this advantage is not so great as at first sight appears. For selling price is inextricably related to cost of production. Again to pray in aid the economist, we shall rightly be warned that in the long run selling price and cost-of-production price must coincide. Such variations as occur between them are due chiefly to temporary fluctuations in demand, which either drive the selling price below or raise it above the cost-of-production price for short periods. But in the long run the price of any article must necessarily follow fluctuations in the cost of production. This being granted we are back again in the same class of considerations that we dealt with under the previous definition. Which selling price is the anti-dumping law to take cognizance of? Is it the selling price that would prevail if the dumping country is permitted to export freely, or is it the selling price that would be fixed if it is strictly confined to its own territories? On the answer to this question the whole position turns.

There is a third definition of dumping, which we mention only to pass bythat is, dumping consists in selling to a country articles which it can not produce for itself at the same cost or price. Put briefly, this definition really amounts to saying that all foreign competition is dumping. There would be no foreign trade possible if every country refused to admit the goods of its competitors until they were at least equal in price to the goods it produced at home. The absurdity of this contention is self-evident. Whatever legislation the Government may introduce, we may be certain that it will not be based on this principle.

In the course of the speech under discussion reference was made to a special variety of dumping against which defensive measures must be devised. It was pointed out that whereas before the war the sovereign was equivalent to 20 marks, it is now worth 82; and fear was expressed that British industry would be seriously embarrassed by the influx of a great quantity of German goods which could be purchased on advantageous terms during the period of readjustment. To meet this situation, it was declared, "We shall therefore propose that the Board of Trade be equipped with emergency powers to check a sudden and undue importation of goods at prices altogether below the cost of production owing to the collapse of exchanges."

It will not be surprising if no exercise of such powers is made; for it would seem that the situation must adjust itself. The present advantage of the German producers will continue only so long as they can sell goods made from materials already within the country; for when they import materials they must pay for them at the high prices necessitated by a depreciated currency. It should also be borne in mind that many of the German products are of a sort that would serve as the materials for British manufacture, and that the importation of those products, against which it is proposed to protect key industries, is to be controlled by a system of licensing.

PROPOSED RESTRICTIVE LEGISLATION.

The restrictive measure promised by the Prime Minister has recently been introduced into Parliament. It provides for a committee

or board made up of the President of the Board of Trade, the Financial Secretary of the Treasury, the Under Secretary for Foreign Affairs, the Secretary of the Department of Overseas Trade, the permanent Secretary of the Board of Trade, the Controller of the Department of Overseas Trade, and two members of the House of Commons-to which board shall be given authority to pass upon individual cases as well as to establish regulations of general application.

This bill is designed not only to prevent the dumping of German goods in British markets; it also has to do with matters that may affect the trading relations with all foreign countries. Thus it provides that "where goods imported into the United Kingdom for purpose of use thereof, or in the manufacture of any article assembled or manufactured in the United Kingdom by or on behalf of the consignor, and the price at which articles so assembled or manufactured in the United Kingdom is less than the foreign price of such articles, this part of this act may be applied to goods so imported, subject to such modifications as appear to the board to be necessary in order to adapt this part of this act to the circumstances of the case."

In other words, the board could prevent any foreigner, even though he operates a factory in the United Kingdom, from shipping raw materials and manufacturing them in that country for sale at a price less than the same goods would be sold for in the country from which the raw materials were derived.

It is also proposed to give the board authority to determine how prices on any article in its country of origin shall be converted into sterling for the purpose of a comparison of selling prices in the two countries concerned. Should it be found that the British selling price is lower than the price in the other country, the seller would be compelled to pay the difference to the board.

The board is also to have the right to prohibit the importation of certain goods and to fix maximum prices, and to require either individual or blanket licenses on any or all imports or exports.

This means, in short, that through this new legislation it is proposed to put in the hands of an ex officio body the authority to impose a protective system and to change it from time to time, almost at its sole discretion, as individual cases are presented to it for decision. It means, also, that a trader would never be able to determine in advance what it would be necessary for him to know before he could calculate the buying or selling prices of goods.

DESIRE FOR TARIFF PROTECTION.

Of the desire for import restrictions and tariff preference there is evidence in plenty in many of the reports that have dealt with the post-war position of British industries. This is a matter that has already received attention in the report of the Bureau of Foreign and Domestic Commerce on Economic Reconstruction (Miscellaneous Series No. 73, 1918, pp. 18-24.) In the year since that report was issued, however, the menace of "Mittel-Europa" has been removed through the downfall of the Central Powers, and the recommendations of the economic conference of the Allies, and of the imperial war conference, as well as much of the contents of the several reports of the (Lord Balfour of Burleigh) Committee on Commercial and Industrial Policy and of the various departmental committees of the Board of Trade

are now out of perspective. But the spirit behind those documents is not dead; and the demand for imperial self-sufficiency and imperial preference is no less insistent. The fear of German competition has given place to the fear of American and Japanese competition; and while little is now heard of a vast stock of German goods to be "dumped" in British markets after peace is restored, there is much denunciation of "Manchesterism," coupled with urgent claims to protection through a tariff. It is certain that these claims will continue to be forcibly presented. The protectionists are strongly organized, and through the Tariff Commission, the Tariff Reform League, and the Federation of British Industries, the Association of Chambers of Commerce, and the National Union of Manufacturers, not to mention local and provincial organizations, they are well prepared to state their case. On the other hand there is the Cobden Club, the Free Trade Union, the free-trade press, and the British tradition of liberalism in matters of trade, with roots reaching back to Magna Carta.

There is nothing new that can be said as to the economic principles involved in the tariff question. That question has been fully discussed in Great Britain, particularly in the years immediately before the war. In the argument of the tariff reformer of to-day, the economic aspects of the question are subordinated, and stress is laid upon political considerations. A coalition Government, however, from its very nature can not take a definite stand in the matter without danger of dissolution. The only concession that has been made to the advocates of a protective tariff is the inclusion in the 1919 budget of a provision for imperial preference.

IMPERIAL PREFERENCE.

All the British Dominions have protective tariffs, but while they have given preference in the form of lower rates on Empire products there has been no reciprocal action on the part of Great Britain, though the matter has been agitated since the beginning of the last decade. The difficulties involved in the proposal are obvious, for the bulk of Empire products received in Great Britain consists of foodstuffs and raw materials, most of which now enter free of duty. To impose duties upon such commodities would necessarily increase the cost of production in British industries.

Under any circumstances it has been generally considered inexpedient to impose duties on food; and when, in April, 1917, Mr. Lloyd George indorsed the principle of imperial preference, it was in the expressed belief that there need be no imposition of burdens upon food.

However, the imperial preference rates introduced into the 1919 budget as a "small beginning" cover food as well as manufactured articles, but not raw materials. The list follows:

Preference one-third.-Cinematograph films; clocks and watches; motor cars; musical instruments.

Preference one-sixth.-Tea; cocoa; coffee; sugar; tobacco; motor spirit.
Preference various.-Beer; wine; spirits.

While the budget was under discussion by the committee on ways and means, July 9, the chancellor of the exchequer proposed an amendment authorizing the Government, by order in council, to

extend the imperial-preference provisions to any "territory in respect of which a mandate of the League of Nations is exercised by the Government of His Majesty's Dominions," and despite objections to the effect that the measure was inconsistent with Article XXII of the treaty of peace, it was adopted.

The arguments in favor of the establishment of imperial preference are of three types sentimental, political, and economic. The first two are sufficiently obvious, and they are, moreover, irrelevant to this discussion. On the economic side, the arguments are various. The following excerpt is presented as a fair example:

Great Britain can obtain nearly all the raw materials required for its industries from the Dominions; and in many cases the Empire enjoys a monopoly of essential products. If, instead of allowing our competitors to obtain these raw materials on the same basis as ourselves * * * we reverse the process and charge them a higher price; then our manufacturers are afforded an advantage which does not in any way add to their costs of production. Where * * * a foreign country has the monopoly of a raw material, our imperial resources enable us to bargain to advantage for supplies of such raw materials in return for others which the particular country needs. (Saunders, "A SelfSupporting Empire," 1918, p. 78.)

The professional economist, however, sees difficulties in the proposal. Thus, Prof. Alfred Marshall, one of the foremost living economists, says:

It is obvious that Britain can not grant a preference on imports from any country, unless she first imposes a tax on imports from other sources. As few are willing to impose import duties on wool, cotton, and other important raw materials of manufacture, this leaves her without any very important preference to be granted to the rest of the Empire, except in regard to food; and here the first place is given to staple grains and meat.

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This proposal seems at first sight to have an easy course. But it does not work out easily. If Empire grain is admitted free and Argentina grain is not, then Argentina grain will cast Empire grain partially or wholly from other markets; and Britain will be supplied almost exclusively from the Empire at about the same prices as before; and she would then in effect levy scarcely any tax on grain, and there would be no considerable use in prices and no effective preference. If, on the other hand, Empire grain is taxed at a rate lower than that levied on other grains, then British people will pay increased prices on all their grain from whatever source it is derived; and only a part, probably not more than half, of this extra payment will be effective in extending the area of cultivation in Britain; she will then make a valuable present to other parts of the Empire at great cost to herself.

If this were done as a free gift, it would be a splendid generosity; but such gifts are commonly expected to meet with some return; and experience shows that business transactions with relatives and friends are dangerous. * * * Canada and Australia might probably rate the importance to Britain of any preference they gave to her manufactures over those of France, the United States, etc., higher than she did; and she might rate more highly than they did the importance to them of any preferences she gave to their grain over that of America, Argentina, and Russia. * *

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External preferences that give rise to internal discord are likely to have harmful results-economic, political, ethical, and even military.

Difficulties of this kind will be found to open out in every direction if specific details for graduated preferential duties are considered closely; and they are in addition to those evils which * * * are inherent in every protective system. But they are likely to press more hardly on Britain than on any other country, because they would eat into the heart of those export industries on which depend her economic strength, and especially her power of bearing the grievous pressure of taxation that lies before her. (Marshall, "National Taxation After the War," in Dawson, "After-War Problems," 1917, pp. 342-343.)

EXPORT RESTRICTIONS.

During the war the War Trade Department was created as a department of export restrictions, and exports were controlled by a system of licensing. The problem was to conserve shipping and also to prevent any trading that would result to the advantage of the enemy countries, and merchants in foreign countries suspected of enemy affiliations were enrolled on a "Trading With the Enemy (Statutory) List."

Relaxations were announced immediately after the signing of the armistice, and announcements of further relaxations were made thereafter at frequent intervals in the Board of Trade Journal. The Government's transitional policy in the matter was thus presented to the House of Commons on March 10, 1919:

With regard to our exports, there are three main heads under which I think it is necessary to view the present position. First of all, much of the difficulty which our merchants, our manufacturers, our exporters are finding with regard to getting their business going does not arise in this country at all. It arises in the country to which they will to send their goods. Just as we for our own reasons must in this transitional period keep a control over our imports, so for their own reasons other countries have to keep a control over their imports. At present, in some countries, that control is extremely strict, because of their financial position. What we are doing there is that we are trying to get arrangements made with countries which may hope to have considerable sums of money placed at their disposal in the not very distant future through payment of the indemnity, or something of that sort. are trying to get them (we know they want such things as we manufacture) to allow our exports, to a certain extent, to flow in, payment for them to be a first charge upon the indemnity they will receive. Anyhow, this is an instruction to the Board of Trade: To establish a system of publicity at once, whereby British traders at home and abroad will be kept regularly and promptly informed of any variation of the restrictions which are imposed by other countries. Those two lines of action, in connection with that, seem to be all that we can do at the moment in that way.

We

The second head with regard to exports covers the general question of exports to nonblockaded countries. In their case the policy is easiest. In the case of the nonblockaded countries there shall be no restriction on exports, except (1) goods required for naval and military purposes; (2) goods which are or will be required for home consumption or home manufacture; and (3) goods which are or have been directly or indirectly benefited by subsidy or by purchase by the state. That is the policy with regard to general exports to the world outside the blockaded area: No restrictions except under three heads. The naval and military head does not affect a very large section of our goods. They, of course, will still be liable to license on export. Obviously it is not sound to allow the export of goods which are immediately or in the near future required for home consumption or home manufacture and thus have a shortage of the goods here. The third heading, I think, would appeal to the whole house. It applies the definite exception that there shall remain under license goods which have benefited by Government subsidies or financial assistance.

In the blockaded area the problem is much more difficult. We have there to remember-we hope for a short time only now-what the blockade is for and why it is maintained. There the Government is definitely moving as rapidly as it can in the direction of securing some such arrangement of the affairs of Europe as will allow this blockade to be removed at the earliest possible date. Clearly, so far as export to the blockaded-area countries is concerned, it is right that the same three exceptions I have mentioned in regard to exports to nonblockaded countries should exist. Further than that, the policy is that the maximum number of manufactured goods which it is possible to transfer shall be transferred to the free list. Negotiations to that end are being carried out at the present moment. It obviously includes negotiations with all the Allies who are represented upon what is ultimately the supreme blockade authority, and that policy is being pushed at the present moment. Every week, as those engaged in trade and commerce to those 153854°-20-5 65

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