Felix Schuster

“ In fact, I believe that to it is, in a great measure, due the fact that until quite recently our Money Market has been the cheapest in the world, though of course, other causes have contributed. I need hardly insist, before a meeting of bankers, on the very great importance to the whole of our commerce of low rates for money. Cheap capital, indeed, is an absolutely essential element in every industry, perhaps the most essential; that is universally recognised, but I do not think it is realised to what extent ability to supply capital must help our export trade. ”

“ Is it too late even now for us bankers and merchants in the City of London to impress on Parliament, if a new departure is to be made, the necessity for full expert enquiry into the general condition of our trade and of our industries. Surely as to this we all stand on common ground, and no man of business could possibly desire a momentous change in our Fiscal Policy without the clearest evidence that the proposed alterations will bring about the results which are claimed for them. ”

“ A comparison with a country like, say, the United States, which produces both its food and raw materials at home, must be therefore entirely misleading; the problems to be solved are of a different nature altogether. We are compelled to import in order to End for our population both subsistence and employment; to pay for such imports we have to render services to foreign countries, either by sending them our own goods, or by finding them capital or means of transport, or in such other ways as our position as the clearing house of the world may induce them to require work done for them here. ”

“ In the matter of education, he had always had the deepest sympathy with engineering on the one side and university training on the other, because engineering was giving, perhaps, the most interesting application of the science learned in the University for the benefit of mankind. He remembered with pride that the first chair of engineering of any university in the country was that founded in Glasgow. He felt that engineers all over the world had still a good deal to learn as to the real value of university training, but he did not think that in South Wales they needed reminding of that fact. ”

“ So great are the banking operations consequent on this trade that hardly a year passes without one or more of the foreign banks establishing their own agencies in our midst, not always to the unmixed delight of their older established competitors, but yet I believe for the common good; for they bring as much as they take; they are evidence that we are supreme in the banking world ”

“ Can we afford to risk our trade with foreign countries, which still amounts to 75 per cent. of the whole! Can we afford to restrict our trade within narrower channels, having regard to our great shipping industry, which carries so much of the trade of the world? Our shipping would indeed be doubly hit; through taxes which would raise the cost of living the cost of ship-building would be materially increased, and, owing to protective tariffs, there would be fewer goods to carry. ”

“ That, I think, is the plain duty of every man of business; but, in order to form such an independent opinion, in order to rely on our own judgment and not on that of others, have we the necessary material at hand? Probably most men in this room have already formed an opinion or have a pronounced tendency one way or another, but I ask you, can you honestly say that you have, each of you, each man for himself, gone into all the various bearings of this most intricate subject? ”

“ The fact of our being the only free market for gold, and also the credit and high standing of our bankers and merchants, have contributed largely to our attaining and keeping our position as the financial centre of the world. But this cannot be the only reason, nor even the main reason, for this position. The banker who buys a bill on London, say, in Valparaiso, does not buy it because he wants the gold; but he knows that, if he has no other use for the bill, he can obtain gold for it, though probably at a small loss to himself ”

“ I hear from a prominent German banker that Germany is watching our discussion over this fiscal question with intentional silence on the part of the Press, but with secret joy, and hope that a change in our fiscal system will take place, and that as soon as we put restrictions and impediments in the way of trade they will secure a large slice of it, and will be able to compete with us in neutral markets with all the more success. ”

“ Is it not our business methods that have to be adapted to modern conditions? When Germany commenced to expand, and to carefully nurse her industries, the first thing she did was to adopt the gold standard, to create the Imperial Bank, and put it on a basis which enabled it to powerfully assist in the commercial development of the country, and to reform her system of weights and measures; she adopted the metric system, and this step alone assisted her materially in her export trade. ”

“ Go to Germany or to the United States and talk with the best informed and you may hear a different tale; look at the condition of life of the working classes in Germany, and not only of the working classes, but of the vast number of people with moderate incomes, and you will find lower wages, lower salaries, longer hours of work, dearer food, dearer house-rent, and you will then have your explanation of the vast increase in the socialist vote apparent at every election. ”

“ It has been asserted by some that if paid for by sales of investments, part of the excess of imports has been paid for out of capital; but this theory is entirely misleading. For the proceeds of such sales of investments, if not re-invested abroad, or of foreign capital invested here, are employed at home, and become, perhaps not immediately, but eventually, productive; the capital does not disappear, but the interest on that capital, instead of coming to us from abroad, accrues at home, and to that extent there is a diminution of what are termed "invisible" exports, though not of capital. ”

“ It must be remembered that foreign countries are still our best customers, and I found it to be a surprise to many that, according to the figures of the Blue Book, our exports of manufactures to Germany last year still exceeded our imports of manufactures from that country by £1,000,000.
Are the Colonies willing, are they in a position to give us as wide a market as we have now, and as we can hope to attain, if only a proper effort be made, in the many markets that are open to us on equal terms with other nations? ”

“ It is quite clear to my mind that the effect of our large foreign trade has been distinctly in the direction of lowering the value of money in our market, and consequently an undoubted aid to our industries. ”

“ It is indeed a great responsibility we carry on our shoulders; it is not beyond the mark to say that on the greatness of our banking resources, the greatness and development of our industries must depend. That the present system of unrestricted trade must increase these resources, as it must also increase the national income through our shipping trade is, to my mind, beyond question. ”

“ It is manifest how such a market would lend itself to manipulation, and, worse still, what would happen if bad seasons should occur. We have an object-lesson before us now in the shortage of the cotton crop in the United States, which may have a most serious influence on our cotton industries. What would happen if a shortage in the crops were to occur in Canada? We could not then rapidly fall back on the various foreign markets which now supply us, for all the machinery of trade, shipping, and other matters, are easily destroyed, but are not quickly regained. ”

“ But what would follow from the carrying out of such a scheme is that, whereas we have now competition between a number of different sources of supply which keeps prices down, the inevitable consequence of a preferential tariff on food-stuffs would be the absence of all competition, our being restricted to one source only, and it is to be expected that prices would consequently rise to an extent greater than the duty to be imposed. What the dangers would be if our food supplies were to be derived from one source only must be apparent to all business men. ”

“ What protection means, further, is the bringing of commercial questions into the political arena, of tariffs and bounties being made the battle-cries of contending parties, of instability and insecurity in all commercial transactions, and rapid fluctuations and variations in prices, bringing loss to the many and large gains to the few, of the growth of Kartels, and trusts, of which modern industrial life in protected countries affords so many illustrations. Germany and the United States are pointed out as countries which have prospered under a system of protection. ”

“ The importance of our remaining the principal market for foreign investments of all kinds cannot be overrated, and I shall refer to this point again when we come to consider the question of balance of trade, perhaps the most difficult question we have to deal with to-night, and one of the most important, in considering Foreign Trade and the Money Market. For it is only through the action of the money market that this balance of trade adjusts itself. ”

“ The merchant abroad who sells his goods here does not know, nor does he care whether any goods go out in exchange; he obtains payment, as we have seen, in a bill of exchange, which does not necessarily imply an export of gold, but which gives the holder of such bills the power of withdrawing gold from here if he so chooses. Thus we have, at certain seasons, such as the present, withdrawals of gold, which can be directly traced to our imports of wheat and cotton from the United States or Egypt, or the Argentine Republic. ”

“ A question is suddenly brought before us for decision, which, rightly or wrongly, may involve a complete reversal of all the traditions under which the last two generations have been brought up. I hold that we should judge it entirely on its own merits; we must, as far as we can, rid ourselves of anything like prejudice or preconceived ideas, or submission of our own judgment to that of others with whom on questions of politics we may have been associated. ”

“ In the face of these possibilities, of the tendency and desire of protectionist countries to remove obstacles in the way of trade which they know hinder them, is it wise for us, unless absolute proof were given of the necessity for doing so, to reverse a policy, during the continuance of which we have admittedly been prosperous! An American of large business experience summed up the situation in these words: "You are going to hoist the white flag just as relief is in sight." ”

“ Danish farmers certainly have resisted all attempts to impose a protective system, and have found a solution in cooperation and economy in bringing their produce to the market, a policy under which they appear to be thriving.
The danger of all protective systems, as far as we can learn from experience, is that, once established, it is most difficult to get away from them, and that they have a constant tendency to grow. The result must be to lead to higher prices all round, and, consequently, to general loss, and higher prices must mean diminution in our exports, which we wish to increase. ”

“ The company promoter has much to answer for; for it must be admitted that in many cases where private firms have been turned into limited companies, the personal interest previously taken by the partners, the pride of a business handed down from father to son, have disappeared. Where the personal element disappears, no undertaking is likely to prosper. There has been, during the last decade preceding the years of the war, a desire to grow rich too rapidly, and the slow but sure methods, constant attention and careful watching of opportunities, have, perhaps, been left too much out of sight. ”

“ A prolonged period of rates prevailing here at a higher level than in other centres has an additional effect; investment stocks go down; in countries that have taken the gold from us, or have the power to take gold, the opposite takes place, money becomes cheaper and investment stocks rise, the consequence is that the home investor in, say, American railway bonds, finds the return to him is less than the return on a home investment, and he will be induced to sell; and that is exactly what has taken place with regard to the United States, and, to a very large extent, a few years ago. ”

“ Has not the time arrived, then, for a new and important office to be created, which is to deal with all industrial matters and watch over the whole commerce of the nation, and which is to be presided over by a Secretary of State who can keep in close touch with the interests of our great industries, and whose duty it would be to ensure continuity in our commercial policy and keep it as far as possible removed from the political arena? ”

“ Is it not strange that in this great commercial country there is no special Government Department to watch over the interests of commerce? We have, indeed, the Board of Trade, and it is interesting to note that when the first Committee for Trade was instituted in 1622, amongst the principles laid down for its guidance was "the importance of encouraging the home manufacture of wool by permitting free trade and lowering the Customs." ”

“ Not being, then, prepared to fully discuss either the fiscal question or other problems of political economy, what can be my claim for addressing you to-night 1 It is simply this, I want a talk with you, as a man of business with men of business. We may be called upon, no one knows when, to give our votes on this question, one of the gravest, most momentous, and most difficult on which the electors of the United Kingdom have had to decide for many generations. And on us men of business a very grave responsibility falls, for we surely ought to be the guides of public opinion in such a matter. ”