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PUBLIC RECORD OFFICE

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سا

C.O.

Reference :-

885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

SIR,

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Enclosure 11 in Gold Coast Confidential despatch of 15th August, 1917.

ANONA CHAMBERS,

SEKONDI,

GOLD COAST,

5TH JANUARY, 1917.

I have received your letter No.11574/M.P.19657/16 of the 29th December last, inviting my attention by the direction of His Excellency the Acting Governor to the Secretary of State's circular Despatch of September 25th last as to the Commercial and Industrial policy to be adopted by the Governments of the British Empire and Allied Governments after the war and asking for an expression of my views,

(a). As to the recommendations of the Paris Conference.

(b). As to the questions propounded to the "Commercial and Industrial Policy Committee, in, so far as the same call for attention with respect to the special circumstances of the Gold Coast, and further asking for comments upon Mr Mitchell's memorandum on the subject.

2. In reply, I beg to state that the principle of a self-contained Empire with reciprocal trade advantages among all its members has my warm support. The same applies to the extension of the idea to the Allied Governments; and any scheme that will be at once just to the producers and consumers in this country on the one hand and to the British manufacturers and merchants on the other hand would receive my sym- pathetic consideration. But, so far, I am not aware that any such scheme has been advanced.

3. Before returning to the point raised in the last paragraph in detail, it may be said that assuming that the object of the Allies is attained and Prussian militarism is crushed so that it cannot rear its head for at least another one hundred years, another point of view might be the promotion of such a permanent peace as would make the recurrence of Armegeddon impossible. Since a trade war might serve to perpetuate the causes of strife, a further point of view might be to make the commercial alliance of the Allies a basis for the inclusion on proper guarantees and at such time as may be considered safe of Neutrals, leading up eventually to the healing of all trade differences among the nations generally. Such considerations affect the future of this country in so far as they would promote an uninterrupted development; but the foregoing is perhaps taking the matter to a higher plane than the present outlook warrants. Still it is worth while keeping these considerations in view in arriving at a final conclusion as to the methods to be adopted in the light of the recommendations of the Paris Conference.

4. Subject to the considerations contained in the last paragraph, I now propose to deal briefly with the question of export duties generally and how they affect this country. I believe it is generally conceded that any export duties imposed in this country eventually fall upon the producers and lead to depressed prices, which have the effect of discouraging production and, in extreme cases, killing the industry altogether.

5. If export duties are to be imposed in this country for the benefit of Imperial trade, the question naturally arises, who really benefits by such imposition and who suffers by it? If by the imposition other members of the Empire, including Allies, are able to buy in a free market outside this country, then obviously, the dealers in such free market benefit without any corresponding gain to this country or loss on their part and, as has been properly pointed out by Mr Mitchell in his memorandum, it is not at all certain that the taxed produce will not eventually find itself in neutral and even Enemy hands. This is obvious since the raw material in its different stages of preparation to the finished article may change hands several times. The gain, therefore, to Imperial and Allied trade by such imposition is much doubtful.

6. To come to the special case of cocoa, any imposition of export duty thereupon of a permanent nature in favour of Imperial and Allied purchasers will have a most detrimental effect upon the economic progress of this country and discourage absolutely any fresh enterprises. The present state of the cocoa trade demon- strates abundantly what has been advanced. Before the war, I understand, subject to correction, that cocoa was sold in the local market at something like 30/- a load of 60lbs. Since the war and the raising of Railway freight on cocoa and the imposition of an export duty, prices have steadily had a downward tendency until, in some parts, it is said to have gone below 10/-a load of 60lbs. What has happened is simple. The Purchaser has taken care to recoup himself and ensure a profit by cutting down the prices. This is made possible by a combination among the purchasers, who command the situation, and against whom the pro- ducer has no remedy, since he cannot preserve his cocoa indefinitely, and there is no outside authority which can command a fair adjustment of prices. This raises the issue that these export duties have the tendeney of benefiting a ring of purchasers at the expense of the producer with no corresponding advantage to general

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Imperial or Allied trade. For it is apparent that if the local output is discouraged to the advantage of a combiné, it cannot benefit general Imperial or Allied trade, remembering always that the small dealer is easily squeezed out. So that unless the Governments of the British Empire and the Allied Governments can provide some sanction against the unfair and undue forcing down of prices, these export duties must prove detrimental to producers and may discourage altogether Native industry.

7. There has recently been brought to my notice cases where farmers have begun to show less interest in their cocoa farms by reason of the depressed prices, and a letter that was addressed to me by Mr J. Nortei Alema of Nawam, a farmer in the Eastern Province, a copy of which is hereunto attached marked “A”, will show the evil that may attend the permanent imposition of an export duty on cocoa.

8. Coming now to export duty on palm kernels, I cannot agree with Mr Mitchell that because there has been a German monopoly in its treatment the local producer should be penalised for the benefit of a ring of British manufacturers without any corresponding advantage to the Native producer. Another point of view is whether it is advisable that for the benefit of a set of British Business men one of the staple industries of the country should be shut out from the free markets of the world, thus reducing the value thereof to the detriment of the producer and possibly also discouraging output. In the history of this country, we have known the people turn away their attention from preparing palm oil and timber for export because of the steadily depressed prices. The same may take place with regard to Palm Kernels and with regard to cocoa, the staple industry of the country, when once these duties have been permanently imposed.

9. It would seem to me to be a sound policy for the Empire, as a self-contained unit, and the Allied countries in association therewith to so perfect their machinery and transport and other facilities as to give no advantage to any Enemy competing with them, thus rendering unnecessary the penalising of the Native producer.

10. Coming now to imports, attention may be drawn to the fact that it is quite conceivable that upon the withdrawal of Enemy goods from the open markets of this country, the corresponding British and Allied supply may be so burdened as to create a hardship on the consumer by inflated prices.

11. The country has had a bitter experience recently by the going up in prices of ordinary articles of daily necessity, and although it may be said that war conditions have had a good deal to do with it, yet there is no guarantee that upon the withdrawal of Enemy competition and the cessation of hostilities the enhanced prices will not be maintained by the combines. The local consumer, as in the case of exports, is also at the mercy of the merchant, and there is tro outside authority that can interfere with huge profits; so that, here also, unless the Governments of the British Empire and the Allied Governments can adopt a sure means of protecting the local consumer, it will clearly be unfair to cut off his opportunity of buying European goods and articles of daily consumption in an open market.

12. I come next to the question of Enemy Shipping. One of the standing grievances of West Africa to-day is that by a combination between the shipping agencies and the European local purchasers it is impossible for Native shippers to send their produce to the open market with anything like reasonable freedom. At Axim it has been repeatedly brought to my notice that Native shippers of mahogany have always had difficulties in making shipments side by side with European firms. This, besides the unfairness of it, has the tendency of imposing an economic servitude upon the Native shipper, and it might be possible for the Governments of the British Empire and Allied countires to take steps to nip the evil in the bud, as, if not arrested, it will certainly affect Imperial and Allied interests in the near future.

13. Provided, therefore, there can be sure safe-guards to prevent injustice to the local consumer and producer by the exemption of Neutral and Enemy competition, being a warm supporter of the principle of a self-contained Empire as I said, it would not, in my opinion, be out of place to prevent the re-establish- ment of Enemy firms in the country. At the same time, it would seem to me that, if the object be to secure for mankind a permanent peace, which matter affects this country, the safest and surest way to conserve that lies in the highest efficiency of the Empire in all its parts in association with the Allied powers, rather than in a trade war; and efficiency, as far as this country is concerned, entirely depends upon wide-spread education and the rapid and advanced development of all our industries in every conceivable way.

I have the honour to be,

Sir,

Your obedient Servant,

CASELEY HAYFORD,

Unofficial Member Legislative Council.

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