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April 19, 1940.
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Hongkong Telegraph.
Friday, April 19, 1940. Wyndham St., Hongkong
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THE prenx "Special to the Telegraph" is used by the "onkong Telegraph to Indicate news which is strictly copyright under the provisions of the_Telecommuni- CALlons Ordinance, 1936. Such new U brass the indication "U"! is received in Hongkong on the date of publication by the United Press Associations, who re- serve all rights and forbid regiublication, elther wholly or in part without previous arrangement
Britain And Europe
The totalitarian view of the British Empire is that it is an example of atccessful piracy. Europe, is treated as the victim of its greed and urged to vid herself of a bully. There is a British view that the Empire is, on the contrary, an example of remark able chivalry. Europe Is expected to recognise this and to be grateful for our unselfishness.
Those who try to see the history of the British Empire as it would Jook to an impartial European would And the truth somewhere between the two views. The motives and' methods of acquisition in the past have been much the same among all expanding European Powers. On the other hand, the strength and character of the British Empire have _made_it_in_some important senses-a-
convenience to Europe.
In the first place, Britain's interest in Europe, has been that of a Power whose ambitions were satisfied out- site Europe. So far as Europe was concerng the overruling British desire was that Europe should fall under the power of a State strong enough to dominate her. In this Case it isuppened that what suited Britain suited also the several peoples of Europe.
NO!
In the second place, British posses- sions scattered over
the sens were
not closed to the merchants and traders of other countries. Any nation, therefore, might well prefer that a territory whose resources and it did not itself arkels
control should be in the hands of Free Trade Britain rather than in those of a Protectionist rival. The German statesman Zimmermann declared, "Our rise depended essentially on the English policy of lite Open Door." The British Empire was thus nn influence for pence.
From these fucts there has grown up school that speaks of a Pax Britannica on the model of the old Pax Romana, and Europe is expected
UE 31
is a
urc
to cherish this legend us gratefully as the Roman Empire was cherished by men of all races who enjoyed its shelter and hospitality. It is taken for granted that the neutral nations must see that Britain is an unselfish Power.
This
dangerous illusion. The extreme case put by the totali tarinna tarians representing the British
a sinister
figure can be from history if we concerned only for dialectical victory. But that answer is not enough. What has to be said of our diplomacy since 1931? What founda for confidence dd it give the neutrals? The sound arguments Mr. Chamberlain ad- dresses to the neutrals to-day might have been addressed to him by the neutrals in the days of appease- ment. The collapse of collective security for whleh Britain must chore with France the chief responsibility, makes a more vivid impression on the mind of Europe than those aspects of our history that strike the Imagination
Britain. To the totalitarian argument that Germany can unity and organise Europe we must not reply merely by showing what kind of a Europe would emerge from this treatment; we must show what we are ready to do to create a different Europe. We have to take an active and a leading part in the economie fark that was shirked or overlooked at the Peace Confer- ence of 1910.
It is not the longest sword but the longest
purse
FIRST of all, we must admit that the war costs a great deal. It costs far more than the last occa- sion when we fought the Germans.
ધવ
18
At this stage in the former struggle the war cost about £3 millions a day, against £6 millions a day now. The expenditure of the French was then £2 millions
a day, as against £44 millions
a day in this war.
Now, why is it that the war costs twice as much as it did last time?
The answer is a simple one. The pay of soldiers and sailors is a bigger item of ex- penditure. Battleships cost twice as much to build. The Air Force has been added to our war services,
When war broke out the Air Force was costing us about a million pounds a day, That is the figure which Sir Kingsley Wood was spending in building and operating our airplanes..
There is also another, chan- nel of war expenditure which did not exist in the lust con- flict-Air Raid Precautions.
That is the service through which the passive defence of the civil population against the menace of air attack is organised. And there is also Evacuation, the cost of main- taining school children from the cities in country districts, where they will not be exposed to the same danger of bomb- ing by the enemy.
☆☆☆
BUT although the increase in the cost of warfare is easy to explain, it has still to be Inced. We have to meet the position that, in our own case and in the case of France, this war costs roughly twice as much as the last war. That is the situation revealed by comparable figures.
What resources have we got to meet this expenditure?
There is, first, the tax revenue of the country. In 1915 we were theeing less than one-quarter, of of the national expenditure out
That was the propor taxation, tion we paid out of income. The rest we borrowed.
To-day we are paying half the cost out of taxation.
That is one tremendous advan- tage which we disciose on this oc- casion..
100
It cannot be emphasised strongly, or repeated too often, that half the burden of the cost of this war is borne on current revenue.
That is equal to four times as much as we paid out in taxation in the same period of the last war. Taxpayers should rejoice. For it means that the more we pay now, the more confidence' we can have after the war.
Other efforts will have to be made, too. We must increase our output and turnover. That is im- perative,
With that increase la turnover we must also increase.laxation. Saving should be encouraged. In every direction, so that borrowings by the Government will not depend upon the inflation of banking credit. For my part it believe that the conduct of war economy will deter- mine the course of the war.
☆
*
WE have payments to make That is where diffi- by abroad.
culties may arise. Indeed, that is the most important financial problem we have to deal with.
Our ability to meet that problem la immensely greater than it was In the Inst war.
And liere let me say, that In Sir John Simon we have à Chancellor of the Exchequer who is able, cool, far-seclug, cautious and eco- nomical. And no more can be said in praise of a good Chan- cellor.
Now let un array the resources, at our command för making par-
chases abroad.
that
conquers
THE RESOURCES of Britain are ample for the war campaign in which we are involved.
That is a proposition which, if it can bo sustained, will do much to fortify and strengthen the courage and endurance of the British public. More important, it will instil confidence in the hearts of the great multitude of American citizens who wish us well and are anxious about our future.
ጎ
It may even porsuade some of them to buy our securities and to build up assets in the Empire.
Wo
And at all times we should express our gratitude to them for past friendship. should not hesitate to deal with them frankly. There is no use attempting to hide our views from them or restraining our opinions. The Americans will never thank us for pretending one thing to them and saying another thing among ourselves.
So here is a disclosure of the financial situa- tion of Britain as I see it.
By Lord Beaverbrook
In the total I (11) taking the iberty of including not only French but also Canadian resources, i do so, not because I expect Canadian assets to be available for Britain's service, but because the Canadion war effort must be paid for by the Dominion.
Now what is the position with regard to the ability of the Allies to pay for war material purchased in the United States? What re- sources do they cummand for this purpose?
There are the GOLD RESERVES of Britain, France and Canada. These amount to: Britain
France
Canada
Other British. und French countries
£500,000,000 750,000,000 54,000,000
130,000,000 £1,134,000,000
A total of.... Then-there-are-the....CASUL. BALANCES standing to the credit of Britain, France and Canada in the United States.
These amount to £317,000,000 of which Britain holds about 010- half.
D
Liquid securities possessed by the three stand at Agure of
LU55,000,000.
And the non-liquid securities And owned by Britain, France Canada can be reckoned at a total of £385,000,000.
So the total resources of the
Allies, which would be available for purchases in the United States, amount, if the Canadian resources are Included, to a total of about
£2.400 millions.
*
THIS compares with a total of gold and dollar resources in 1914 of about £1,600 millions.. It shows an immense increase in financial strength.
In the last war Britain and France bought on balance from the United States £2,300 millions' worth of goods all told. This is the total American anles to the two chief Allied Powers after de- ducting their exports to the United States. If we can confine ourselves to the same sum, as I am con- vinced that we shall, owing to the development of our own raw
interials,
Canadian then, with financial resources included, we have enough gold, cash and Hquid securities to buy the goods we need.
We must also take into account our capacity to pay for some of our American imports, by means of exports to the United States. This capacity wil, In fact, be greater than in the last war owing to the development of production in the Empire.
Then, in addition, those, exports to the United States with include sales of animal, vegetable and mineral commodities by the British Colonies and also the French Colonies. There is the very big export from Canada of metals and newsprint. There is the gold ex- port from Empire countries.
But it must be borne in mind that Canadian assets, of whatever des- cription, are not available to pay for Britain's purchases. And that
Canada's Anonelal resources have been included in the totals given above. Against these Canadian assets there are, of courso, numer- ous holdings in neutral countries, notably the South American re-
· publies, which have not been taken into account.
It is my view that, since the nutbreak of war, we have so for last name of our American assets.
There has been no reduction in, them worth recounting,
☆
☆
HOW has it been possible for us, in war conditions, to effect this husbanding of our resources?
For account:
this must be
taken Into
Gold will buy more Imports than it did in the that war, For that reason,
our purchases from abroad will not be so expensive: as they were. They will, in fact, cost much less in terms of gold and netually alightly less in terms. of sterling.
FRW
OUR purchases of materials may be huge. but remember, in gold values, the price of raw materials is less than half what it was in the last war. This is startling,
but it is a fact.
The Investor's Chronicle, a nioat reputable financial Journal, has re- cently made an extensive calcula- tion of the total Imports of raw materials into Britain during the last war.
It was shown that these imports represented 385 million ounces of gold.
This journal then reaches the astonishing conclusion that simi- lar quantity commodities, tak- ing prices at the outbreak of war, could be bought with 154 million ounces of gohl,
But it is not in gold alone that the remarkable Empire develop- ment bas -been demonstrated. There are many other ΣΤΗΝ materials where increases of pro- duction since the last war show far more striking results.
*
HERE is a which
short table. I hope will reveal quite clearly the wealth and strength of the British Em- pire:
BRITISH EMPIRE OUTPUT
Nickel
Copper
Bauxite
1939 Tons Tons
Year Year 1013
22,500 102,000-
94,000 600,000
(aluminium ore) 25,000 400,000 Rubber Cocan
40,000 600,000 00,000 415,000
It will be seen that in every ease there is n considérable in- creuse in the quantities of these
There has, of course, been sharp wartime decline in some of Horinal purchases from the United States We have reduced--commodities-produced--in-the-Em-- our import of American tobacco. of cotton, of wheat and other com- modities.
In the case of tobacco we took in the month of October 1939, for instance, six million dolars' worth, 41 compared with twenty-nine million dollars in the same month * 1938.
The decline is due, in measure, to economy in consump- tras. To the desire to do without Dut this economy, is supplemented, by an increase in production of tubacen in the British Empire.
some
Our dependence on American supplies of tobacco is thus reduced.
The value of the import of raw colton which Britain can derive from the Empire Is mare than three times greater than it was before the last war.
And although in that last war we brought more than half our imported wheat from the United States, at a cost of about £200 milions. the Empire can now supply all the whent that we need.
Now we must take into account the production of vegetable, animal and mineral wealth in the British Empire.
The extension and development of these resources has been carried en In the last twenty years at a rate which far outstrips any other development in the world.
It is true that the progress hus been unsatisfactory to men who have always been conscious of this vast treasure house given into our keeping. The treasure house that is known as the British Empire..
But while we cannot claim to have turned our single talent into ten, neither can we be dismissed as the servant unworthy of the master's confidence.
Let us look, then, at gold pros duction. And here I wish to em. phasize that gold production is not to be confused with gold slocks.
Gold production relates only to the gold that is mined from the earth year by year.
The gold output of the British empire was, 14 million fine ounces In 1914. It is 21 million ounces now,
That is on Increase of 50 per cent in quantity. And it so far bigger increase when measured in money values.
pire. The total result is an eight- fold increase in output.
And always there is an increase in Empire production relative to world output.
The position with regard to uil is different.
The Empire production is xix million tons. Under the control of the Empire is a production umounting to perhaps 25 million lons.
The Empire production is about the same in relation to total world output ne it was in 1914. But we derive beneft from the 25 million. tons produced outside the Empire with our money.
It will be aceh, then, that the. strength of Britain, Cannds, and the rest of the Empire is so great. that I secina impossible that we can in the long run suffer defeat..
In fact, on economic issues the triumph of the Empire is assured.
WE pass at once to the dark forebodings about the future sometimes held and expressed by business men reluctant to undertake new obligations.. The forebodings we can pro- nounce utterly unwarranted. It can be said with supreme confidence.
There is every liope, prospert and expectation that from the war the Empire will emerge.so strong in row materinis, SO rich in mineral, vegetable and mineral assets that it should afford a future illed with hope and bright with the prospect of happiness and con- tentment to our people.
I hope, too, that, even when the war progresses and we turn in an immense effort and concentration to fighting and destroying our enemies, we will at tho. same time develop our resources to the fullest extent,
Our raw materials, the produce of the soll, and our animal wealth, here
at home, in the Crown Colenies, and in other parts of the Empire, constitute our strength and Justify our confidence.
Such a development would in- volve us in forming a firm resolve · to use our man-power to the utter-
most at home and abroad.