Finance Public & Private

, The City and Fiscal Policy THE reluctance of the City and of Bankers in particular, to take any- part. in political issues is proverbial. It is scarcely surprising, therefore, that the "splash" notices in the morning newspapers of last Friday to the effect that Bankers, by passing certain Resolutions, had given as it were, a "death blow to Free Trade," occasioned consid- erable excitement, both in political and financial circles.

And probably no section of the community was more startled than the Bankers themselves, who had met, as they considered, in confidential conference to consider certain resolutions, which, it had been supposed, would have been considered more or less privately by all three political parties, and the method of publication to be determined later. Just how the fact of the Bankers' meeting and the resolutions discussed at the gathering came to be made public so suddenly, seems to be more or less of a mystery, and indeed, the only point that I am concerned with is to endeavour to report, as faithfully as may be possible, the general feeling of the City with regard to the fiscal policy which was the subject of consideration by the Bankers and also with regard to the action taken by them in approving certain Resolutions.

DIVIDED VIEWS.

It would be as incorrect to say that the City has suddenly gone over to Protectionism as it would, at any time in recent years, to have declared that the City was solidly for Free Trade. I think this fact in itself is rather suggestive, because, freeing the mind as far as possible from all preconceived notions, it means that on this subject of fiscal policy, expert judgment of Bankers and business men has been, and probably always will be, pretty sharply divided. Here and there, of course, are to be found what I can only describe as bigoted Free Traders or bigoted Protectionists, but for the most part, I think, such bigotry is generally allied with political partisanship rather than with economic conviction. It is impossible for a practical Banker or business man not to discern defects in the working out of Free Trade principles, or fail to discover many dangers lurking in a Protectionist policy. For the most part, the average broadminded business man, having examined the subject with care, will come to the conclusion that he has to decide, not what is the perfectly ideal policy as regards Free Trade or Protection, but which policy on balance is best suited for the needs of the country, and for the requirements of the country at the present time.

THE PROLONGED DEPRESSION.

Now there are certain main points in the present situa- tion which it is impossible to ignore ; such facts, for example, as the prolonged depression of trade which, although now almost world-wide in character, has been centred in this country over a period of years. Another fact is that, since the War, and owing to our indebtedness to the United States, it has become more indispensable than ever that we should meet those payments through an increase in our exports, that same truth also, of course, applying to other European countries indebted to the United States. Arising out of this situation is the further fact that America, which has always been a Protectionist country, has heaped up its tariffs since the War just at the very time when it might have been thought, having regard to Europe's indebtedness and the necessity for Europe exporting goods and services in payment of such indebtedness, that the tariff wall might have been lowered instead of raised. Nevertheless, and the point of course, is emphasized in the Bankers' resolutions, although for four years this country has endeavoured to give a lead to Europe, as regards Free Trade, not only America, but most countries, so far from respond- ing to, this lead, have raised their walls 'higher and higher, and there are even Some Free Traders to-day who support the action taken by the Bankers on the ground that it may lead ultimately to a round-table (Continued on page 68.) Finance—Public and Private (Continued from page 07.)

conference between, the Various countries and the 'estab- lishment of a general understanding making, if not for universal Free Trade, at all events for less protective measures on the part of the United States and other Protectionist countries.

EXTREME VIEWS DEPRECATED.

I do not propose to discuss how far the present industrial depression is accentuated by the force of foreign conk- Petition or how far that competition might be met by measures of Protection, for to do so would be to discuss the whole problem of fiscal policy which, unfortunately, has become so intertwined with party politics. At the .same time it would be folly to ignore the fact that the protracted industrial depression, with its repercussions on financial as well as commercial activities, has created SDI atmosphere unfavourable for the moment to the cause of Free Trade, and, further, the City considers that at this particular juncture the present Chancellor of the Exchequer has acted unwisely in going to unnecessary extremes in his rigid antagonism to Safeguarding. llis zeal, in fact, has partaken too much of the nature or fanaticism, and fanaticism never (lid permanent good to any cause. Reaction is inevitable, and personally I doubt very inueli whether we should have heard anything of the present Bankers' Resolutions if Mr. Snowden had displayed a more temperate attitude towards the general question of the Safeguarding of certain industries, which, admittedly, are affected in special and peculiar manner by the after-consequences of the War.

No " PoLenes " IN TDE CITY.

I hink that I should be summing up the views of the City very fairly if I were to say that the preponderance of opinion is strongly in favour of the general sense of the Resolutions adopted by certain representative Bankers, though in passing it should be carefully noted that these views are the views of bankers in their individual eapaeity and not as necessarily expressing the NiewS of the institutions with which they are connected. Naturally, those who are enamoured of the Bankers' resolutions, and especially those who would use them for political purposes, make the most of the fact that certain of the Bankers happen to be on the Board of the Bank of England. But not only is it one of the oldest traditions of the Bank of England that it has only one political loyalty, namely, to the Government of the day, but it is a tradition which was never more faithfully observed than it is to-day. And it is well that it should be so, for, whatever may be the truth concerning Protection or Free Trade, or whatever may be the respective merits of the various political parties in the City, there was never a t ime when it was more necessary that politics should be completely divorced from business and finance and that finance and business should be divorced from polities.

A DELICATE SITUATION.

Such being the ease, it is scarcely surprising that there should be some concern in the City as to the wisdom of the course which has been taken by recent Bankers at the present moment. I have already referred to the fact that the Bankers are in no way responsible for the moment and method of the recent announcements in the Press, but that does not alter the fact that what was intended to be a private gathering for the discussion of a matter of vital concern to the financial and commercial well- being of the nation has been made the centre of political agitation. No one who has the slightest knowledge of the men alleged to have supported the Resolutions which have been published will for one moment refuse to believe that they were actuated by the highest motives. Men, such as Mr. McKenna and others, who have before now cham- pioned the cause of Free Trade do not lightly lend their support to a policy of a different character without the belief that very grave reasons justify them in abandoning that attitude of reticenee which has long been associated with the British Banker.' It is, in fact, the admitted gravity of the situation wkich•-haS. evoked- the recent action by the Bankers, and whetherthat action is mistaken

or not, the high motive is beyond all question. Never- theless, it is also true that while there may be a commercial crisis in the country, there is also something like a political crisis, not least within the Conservative Party itself, and it has been impossible for the Bankers' Resolutions not to have played an important part in shaping the developments of polities.

NATIONAL INTERESTS.

And, unfortunately, there is too often a tendency not merely to fail to appreciate motives but to impute unworthy ones. If, therefore, those Bankers who, in spite of the present conditions of trade, are firmly con- limed that the solution of our troubles is still to be found along the lines of rigid adherence of Free Trade principles should express their views openly, it would be no matter for regret for it cannot be too emphatically stated that the concern of the City is not to inter-meddle with politics in any way. On the other hand it should be free to express its expert views on matters which rightly viewed are really removed from the arena of politics and should be considered at all times from the standpoint of the national interests.

ARTHUR W. Mom%