Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-16
pY RAYMoNp LESLIE BUELL..

When a NV loan or short-term credit
Is finally granted, the supplicant heaves
a sight of relief as If his problem
had at last been solved. In the long
run, however. a policy of borrowing
IS no solution for the acute problems
confronting the world today. Sooner OF
later loans must be repaid and this
must be done with goods. The funda-
mental solution of the present world
crisis is a revival in international trade.
For many years economists have
preached the doctrine that this revival
cannot take place until the present
political barriers to trade are reduced.
In 1927 the World Economic Conference
formally declared that lin view OF the
fact that harmful effects upon produc-
ton and trade result from the high
and constantly changing tariffs which
are applied In many countries and in
view of the fact that tariffs, though
within the sovereign Jurisdiction Of the
separate states, are not matter OF
purely domestic interest, but greatly
influence the trade of the world +.
the time has come to put stop on
increase In tariffs and to move in the
opposite direction"
This resolution has not been applied,
however. Nearly every nation in the
world has increased its tariff during
the last three years. The tendency to
do so became particularly acute as a
result of the world depression, which
began In the Fall Of 1924 Each state
attempted, If unsucceSsfully, to stave
of this depression by heightening its
tariff walls. Following the example of
the Smoot-Hawley tariff of the United
States, about IS nations have increased
their duties on American goods during
the last year.
For q time the League Of Nations
bravely attempted to combat the pro-
tectionist movement upon an interna-
tional scale. In February, 1890, It con-
vened a conference, attended for the
most part by only European states, for
the purpose of adopting a tariff truce
for transitional period during which
the nations would have breathing
space in which to negotiate mutual
tariff reductions. But because PHI
marily of the opposition of France, the
League conference failed to adopt the
tariff truce. AS substitute it drew
up a convention prohibiting states
from increasing certain duties within
a year without first negotiating with
other parties to the convention. In
case negotiations failed to produce
settlement, the convention as a whole
could be denounced.
Although two conferences were sub
BeQuently held at Geneva, In an at
tempt to put this limited agreement
into force, 1t proved impossible to Sc
cure enough ratification to do so. and
the efforts of the league to reduce
tariffs by international agreement thus
came to an end.
The Leagues experience seems to
demonstrate that at present 1t is WRIT
ally impossible to expect the ~ ma
tions of Europe, not TO mention the so
OF so states of the world, to arrive at
any multilateral agreement providing
for tariff reduction. In the first place,
the economic interests of such large
number Of states are too divergent to
permit agreement In many countries
Industries have been supported for
years by tariffs and governments do not
wish to tnjure vested interests. Other
countries maintain what thsy consider
q well balanced social organization by
means of tariffs. France, for example,
could probably purchase wheat more
cheaply from Eastern Europe than at
home under regime Of free trade, but
France does not wish to do SO, since
this would mean the destruction Of the
French peasant
Moreover. the reduction of tariffs and
the growth of international trade means
an increase in the economic dependence
Of one state upon another, and states
which still live in fear OF attack VIII
not. II they can possible avoid 1t, be-
come dependent upon foreign markets
for vital economic needs. Such depend
ence might mean defeat In time OF war.
Until the political fears of nations are
removed, universal tariff reduction
seems out Of the question.
Reduction Movement Begun.
Nevertheless. as an outgrowth Of the
League efforts, a movement for tariff
reduction UPON a limited scale Is taking
fhnrQ States
willing to make mutual concessions.
The most spectacular attempt 81 this
nature was the proposed Austro-
German customs union. Even though
this union may be dead, there are other
projects which may soon be realized.
Thus. In the Summer OF 1880, four
Eastern European countries, each hay-
ing an export surplus of grain, held
three conferences at which they pro-
posed that the industrial countries OF
Europe which are obliged 70 import
grain, give preference 70 grain from
Eastern Europe.
That Is, if France, FOR example, should
charge general duty Of 20 per cent on
wheat II should charge only 10 per cent
on grain from the Balkans. This idea
Of Euopean preference has been In
Slorsed by several ether international
gatherings. including the international
wheat conference at Rome last May.
In the following month what appears
70 be the first concrete agreement en-
bodying this principle was concluded
between Rumania and Germany. In
this treaty Germany reduced its duty
on Humanian grain roughly by half IN
return for similar tariff reductions on
German exports by Rurnania. 1t il
significant that this agreement was
discussed by one of the committees on
European union. meeting at Geneva, to
NJ
lure the general economic interests OF
Europe The committee decided I'm the
negative and approved the treaty as the
beginning Of what may become gem
eral movement.
In fact. the fundamental basis Of any
plan for European union seems to be
mutual tariff reduction In which the
goods Of European countries are given
preferential treatment over goods from
the United States and other non
European countries.
At present the extent TO which ex-
elusive tariff preferences may be
granted Is limited by what is called
the most-fayored nation clause. A ma
ton accepting this clause promises not
to favor one nation more than another
in its commercial policy--that is, II
State A grants a tariff reduction to
State G the benefit of that reduction
must also be given to State B.
Beginning with the famous Golden
treaty OF 1850 between England and
France the most favored nation clause
has been the basis Of European COM
mercial policy. Before the World War
the clause was frequently evaded while
Il was also ineffective when nations
abroEated their commercial treaties TO
embark on tariff wars" Nevertheless,
ON the whole. Il worked against tariff
discrimination Although during the
World War France abandoned the most
favored nation rlnlicY a retairned 70 this