Safeguarding for Iron and Steel
1T is already clear that the Safeguarding or Protection- ' ist controversy—whichever one chooses to call it— will turn upon the safeguarding of iron and steel. If it be true that, in spite of the creation of many new and profitable industries, we cannot hope for a permanent re-establishment of British trade until our heavy indus- tries are again flourishing, the state of the iron and steel industry must be anxiously watched as one of the indices to the rise and fall of our hopes. The thoroughgoing supporters of safeguarding are indignant that this notoriously depressed, but tremendously important, basic industry should have been prevented by the rules from even laying its case before the Safeguarding Tribunal. In this article we want to examine the results which would probably flow from the safeguarding of iron and steel.
It is generally understood, as the result of what Mr. Baldwin said at Yarmouth, that access to the Tribunal is to be made easier. The rules are to be simplified. We do not understand, however, that there will be any substantial change in the tests which the Tribunal will apply to every claim for a safeguarding duty. At present an appealing industry has to prove that the industry is of substantial importance and reasonably efficient, that the foreign competition is exceptional and that the foreign goods are produced Under unfair conditions, and that a duty would not seriously affect other industries. The industry has to apply in the first instance to the Board of Trade. The Board of Trade decides whether the claim is a proper one to be submitted. In the last four years the Board has passed on to the Tribunal twenty out of forty-nine applications. Out of these twenty, the Tribunal has admitted only nine claims.
It was noticeable that when Mr. Baldwin was speaking of the simplification which would enable industries hitherto barred to approach the Tribunal he was careful to add that before a safeguarding duty could be granted the industry would have " to prove its case." It is not to be expected that if the tests remain substantially as they are now there will be any considerable increase of safe- guarding. And by these conditions, if we have interpreted them correctly, the Unionist Government will be bound during the whole of the next Parliament. There is no question, of course, of altering the rules during the present Parliament. Mr. Baldwin rightly feels, in view of his past pledges, that he has no authority to take any step till after a General Election.
Now let us suppose that 'the Unionists are returned to power at the next General Election, that the new regula- tions are introduced, and that the iron and steel industry presents its claim to the Tribunal. We _venture to say-that if the claim is recognized as good by the Tribunal it will be next to impossible for the Government to carry on the policy of safeguarding any longer as a minor industrial incident. They will not be able to:place-the responsibility upon a tiny Tribunal with a more or less unknown per- sonnel." They will have to shoulder the burden them- selves. For the iron and steel industry is, in fact, a basic raw material industry. An enormous proportion of trades in the country use partly, or even wholly, manufactured iron and steel as their raw material. To increase the price of the raw material of all these industries would be a fiscal change so far-reaching that it would open up the whole question of a general tariff. What would the shipbuilders say ? They are hard- pressed enough already, and are a brave and uncom- plaining class, but when they were on the point of recovery could they stand an increase in virtually the whole of their material ? What would the railway companies say ? They hope to turn the corner but they have not done so yet. What if at the moment when they were " making good " they were faced with an increase of cost in their rails, their engines and all their rolling stock ? What would the farmers say ? It must not be forgotten that every year agriculture relies more upon mechanical implements. Is agriculture an industry that can fairly be asked to bear another blow ? And what would every contriver of a small household budget say ?
Of course, the safeguarders assert that the price of iron and steel as a raw material would not be increased, but might even fall. They base their belief largely on the fact—which we should be the last to dispute—that the more an industry produces the more cheaply can it produce, owing fo the progressive reduction of overhead charges. Many engaging calculations are made by safeguarders on this subject, but there is a flaw somewhere and they do not appear to survive the strain of experience. Mr. Joseph Chamberlain, at all events, acted on the assumption that the price of a taxed article would be higher. That was why in his Tariff Reform campaign he used to promise that no duties should be levied on imported raw materials. How he was going to distinguish between raw materials and finished articles was never explained. He frankly and boldly said that small duties must be imposed on the imports of foreign food in order that the Dominions and Colonies might have free ports in the Mother Country. This was inevitable in his scheme, because if the. Empire was not given a preference over the foreigner in food imports it could hardly be helped at all.
Now we see a transformation of Mr. Chamberlain's scheme, and Mr. Baldwin promises that, whatever happens, no food shall be taxed. He means to steer clear of the rock called Dearer Food, which wrecked Mr. Chamberlain, but if he listens to some of his safeguarding pilots he will be in danger of wreck on the rocks called Dearer Raw Materials. For, depend upon it, even if an outcry about dearer raw materials were not economically justified it would still be made. Very much the same state of public feeling which defeated Mr. Baldwin in 1923 would be re-created by a great extension of safe- guarding, and it would almost certainly defeat the Unionists at the next General Election but one.
Safeguarding, we were told, would reduce unemploy- ment. But since it was introduced unemployment has appreciably increased. It will be said that the collapse of the coal-mining industry accounts for that. Let us therefore turn to less disputable figures. The safeguard- ing theory rests on the assumption that if foreign imports are excluded our own production rises in almost exact proportion to the amount of goods excluded. According to some tables given in the Daily News only 67,000 tons of pig iron were imported in the first half of this year, as compared with nearly 400,000 tons in the first half of last year. The output of British pig iron ought therefore to have increased. As a matter of fact it fell away by more than 800,000 tons. Again, during the first half of this year our total iron and steel imports declined by more than 1,000,000 tons, but the home production did not increase. It fell slightly.
Finally, there is an argument against the extension of safeguarding which should appeal to all serious supporters of the League of Nations. The Economic Conference in a Report of extraordinary emphasis and great ability declared that there was no prospect of a speedy industrial recovery throughout Europe unless the tariff barriers which were obstructing the free exchange of commodities were knocked down. We hold strongly that our duty to ourselves is inadequately conceived unless it comprises our duty to the League. This is not the time to set up fresh barriers.
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