Evening star., 1932-07-03
OTTAWA MEETING NEARS
AS BRITAIN FACES DEBTS
England's Concern i'm Canadian Meet
Lies in Curtailed Income and
Increased Expenses.

able to pay her bills abroad out Of her
current sales Britain, on the other
hand, was last year short more than a
billion in this direction and trying to
live on returns from her investments
and in the end coming out with a
deficit.
All Of which demonstrates why it is
now a matter of life or death for the
British to find new markets for their
manufactures and why, since the en-
pire is the only conceivable fresh field,
the Ottawa conference IS OF so great
moment. If a system of intra-empire
tariffs can be devised by which British
manufactures will have the advantages
in the markets of the dominions, and
the raw materials and foodstuffs of the
dominions will have a similar advan-
tage in Britain. the mutual profit
would appear to be obvious.
But the thing is by no means as
simple as that. In the first place
many of the dominionS have industrial
establishments of their own which they
naturally mean to protect against Brit
ish competition. In the second place
Britain cannot absorb all the produc-
ton of the dominionS in foodStuffS and
raw materials, while she can get these
things more cheaply elsewhere. Fur
thermore, even the monopoly of the
empire market would not restore her
trade adequately. since capacity of alb
Sorption of the dominions is inadequate
If the dominions undertake to give
British manufactures tariff preference
they will be faced at once by reprisals
from the competitors Of Britain, who are
great consumers of dominion products
If Britain gives the dominionS prefer
ence for their raw materials her own
costs of living and therefore of pro-
duction will go up and she will be at
a still greater disadvantage in the world
markets generally. In a word, the
trouble with the imperial idea is that
Britain and the dominionS cannot sup
plement each other and constitute a
self-suficing unit. Both must also sell
in the other markets of the world.
Thus while the dominionS and the
mother country may do a deal" at
Ottawa and fix up all sorts of minor
adjustments, 1t is impossible to see how
the sum Of all the possible profits
of such adjustments can to any vital
degree help Britain.
Country Faces Exhaustion
The inability to find markets abroad
Is the cause of the constant presence
of nearly 100000 unemployed, which
represents roughly the means of sup
port of quarter of the total British
population. The decline of the pound
sterling and the collapse of values and
returns from British foreign invest
ments has at least temporarily abolished
the cushion which might have broken
the shock. AS it stands the British
can only go on liquidating foreign in
veStments to meet current expenses.
But this process must involve enormous
losses and relatively quick exhaustion,
in view of the present shrinkage of
security values.
World recovery could, patiently, i'm
prove the situation enormously and
might restore a balance between in
come and expense, that is between sales
and purchases abroad, II British foreign
investments recovered their pre-depres-
sion values. On the other hand if the
depression endured indefinitely it would
be quite possible that Britain would be
compelled to part with her foreign in
vestments or they would become value
less in themselves. In that case the
consequence might be catastrophe.
The difference between the British
and American situations is this:
Last year Britain had an approx
mately balanced national budget, but
her income from foreign earnings of
all sorts was not equal to her expendi-
lures. The United States had a budget
in terrible deficit, but its income from
exports and foreign investments far
exceeded its spending in imports and
services. Long continued failure to
balance the domestic budget would pile
up an enormous domestic debt. but it
would not directly reduce the capacity
of the country to finance its foreign
purchases by its foreign sales. On the
other hand no reduction of the domes-
tic expenditures of Britain would in
crease its ability to find foreign ex-
change to meet the difference between
its foreign income and it's foreign ex-
penseS.
And unless the present British condi-
tions can be modified, there is moth
ing in the way Of remedy discoverable,
save as the standard of living, and
therefore the costs of national life de-
cline until British imports are so cor
respondingly reduced as to equal
British foreign earnings. Such a de-
cline, too, SO far as one can now see,
involves a reduction in the standard
Of living below the starvation point
And it is this fact which explains the
note of deep peSsimtSm underlying all
British public comment and the i'm
portance in British eyes of Lausanne,
Ottawa and the proposed world eco
nomic conference. And it also explains
the ever-g growing bitterness over the
American debt policy, for that policy
is forcing Britain steadily toward in
evitable reputation unless world eco
nomic conditions change radically and
rapidly. The bitterness is that Of a
debtor who consciously and beyond
question has made every conceivable
effort to meet its obligations and is
now fighting with its back to the wall.
(Copyright, 1922