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PUBLIC RECORD OFFICE

Reference :--

CO.885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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

MINUTES BY MEMBERS OF EXECUTIVE COUNCIL.

MINUTE BY SECRETARY FOR NATIVE AFFAIRS (THE Late Mr. F. G. CROWTHER).

RECOMMENDATIONS OF THE ECONOMIC CONFERENCE OF THE ALLIES.

1. With regard to those recommendations of the Economic Conference of the Allies which relate to the war period (A) I have nothing to say. A state of war obtains and so long as it lasts it should be waged in every quarter where the enemy may gain military advantage, whether that advantage be securable by force of arms, of political influence or of money.

2. Some of the transitory measures defined under the heading B scarcely affect this country-of this class is the first (The reconstruction of countries affected by the war). The second is no doubt right in the assumption that war terminates all commercial treaties between hostile powers, but the question of the resumption of any one of those would appear to be a matter that only the specific conditions of a restored peace can determine.

It is a question of the comity of nations.

3. The third paragraph must be read in conjunction with C. I., for the "Special arrangement" mention- ed therein can be affected only by the imposition of customs duties or prohibitions. The Assistant Comp- troller of Customs (Mr. Mitchell) in his memorandum enumerates our principal articles of export. Excluding Gold, which does not affect the issue, these are Cocoa, Timber, Rubber, Kola, Copra, Palm Kernels and Palm-Oil. The first three, as he says, are produced generally throughout the tropics. To this category might be added Copra, while Kola, as an article not exported to Europe, does not require consideration.

4. The universality of the output of these products precludes any possibility of inflicting damage on the trade of our ex-enemies or of conferring benefits on that of our ex-allies, while the placing of any embargo on their sale must tend to the creation of monopolies, the constriction of the market and the consequent artificial reduction of prices to the producer. It is, of course, possible that some temporary benefit would accrue to those sections of the trade who advocate commercial patriotism, the middleman and the manu- facturer, but I do not think that a sufficient case can be established to warrant the sacrifice of the native producer to serve the immediate ends of that class.

5. A good deal has been written with regard to palm kernels. Prior to the war certain conditions rendered it more expeditious for this product to be handled in Germany than in Great Britain. I do not know what these conditions were. They may have been natural or they may have been artificial. Among the natural conditions which determine locality might be named those governed by climate or proximity to auxiliary natural products: among the artificial conditions might be enumerated proximity to a special- ized market or the advantages that accrue from the centralization of an industry. Possibly the apathy of British manufacturers was responsible for this German monopoly, but there is good reason to believe that it was largely induced by that demand for the bye-products which is made on the continent but not in Great Britain or Ireland. With the possible exception of the ignorance or inactivity of British manu- facturers all these possible causes are controlled by the ordinary laws of supply and demand as regulated by locality. A remedy a ready suggested is the imposition of an export tax in the producing country. It needs no very profound reasoning to reveal how the introduction of such a system would depress prices in a producing country, the trade of which is already largely in the hands of a monopoly, nor to realize what would be its probable effect on an industry that already shews no uncertain signs of decay.

6. From the Assistant Comptroller of Customs' memorandum it appears that palm oil might properly be classed with those products of general tropical output.

7. In these circumstances, even if the principle of prohibitory tariffs would be justified, the arguments so far as the exports of this Colony go, tend to shew that their imposition in the future while inflicting no damage on the countries it is desired to assail, would in high probability adversely affect our own producers.

8. The fourth paragraph, under heading B, suggests that the imports from certain countries be subject to prohibitions: and recommends also the imposition of special conditions to restrict the operation of their shipping. In the latter proposition the patriotism of the private purse strikes a note that must ring clear in West Africa. Dumping is dismissed without consideration as "unfair "(yet were not recent British.

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activities in ship building rendered possible only by dumped German steel); and the view that the term "Commerce" merely includes those engaged in commercial pursuits to the exclusion of the consumer is again to the fore.

9. To achieve the ends desired by the Conference the only special treatment to which goods originating from the countries with which we are now at war can be subjected after the cessation of hostilities, is by a surtax at the port of entry or total prohibition. Certain of the goods formerly supplied by Germany can and have been supplied, at an enhanced price, by British Manufacturers, but probably the greater pro- portion of trade has gone to the United States. What are the facts with regard to these goods? Some of them, no doubt, could always have been supplied by British manufacturers: others being dependent upon natural conditions could not; whilst for a third class the British manufacturer had not, as in other branches of industry the foreign manufacturers have not, a sufficiently free market to justify specialization.

10. In the first class may be mentioned biscuits and cotton goods and low grade ironmongery; in the second wines, natural spirits, mineral waters, certain drugs, or beet-sugar; in the third light motor lorries. The failure of British Firms to control the trade of the first of these classes may be attributable to a want of enterprise in acquainting himself with local needs: eg. the cheap biscuit and the cheap matchette. It may however be due to the want of a free market-that is a market wherein he could be sure of the supply not exceeding the demand under which goods of the third class may be considered. With goods in the second class he could not compete, save, perhaps, by introducing indifferent substitutes. Goods of the third class are controlled inevitably by the doctrine of the free market. Thus, for example, the United States of America were developed in the era of steam, and consequently, have not the same system of metalled roads as is found in the continent of Europe. The introduction of motor traction evolved a type of light lorry suitable for the indifferent highway of the outlying states in which a high clearance, a light frame and high power were essential to success. This type of machine exactly suits the needs of this Colony, but while quantities are made in America by a number of firms the British Isles produce none. The con- verted chassis of the British touring Car has failed in this country. The American Manufacturer is certain of a free market at home and the British manufacturer is not. It is true that there might be full scope for one or two British manufacturers to devote their attention to this class of lorry, but, acting without direct experience they would have to beat, or equal, the American machine on all points; and even then they would be handicapped by the fact that the purchaser must consider his product in comparison with the wider range of American Cars. So too with regard to enamelled iron-ware goods. The clays which provide the British working classes with cheap earthen-ware are not found in Germany in the same quantity, nor in the same vicinity to auxiliary natural products (e.g. fuel) as in Staffordshire. Hence in Germany among the lower classes enamelled iron-ware largely supersedes crockery. Enamelled iron-ware suits the general needs of this Colony better than crockery and the German Manufacturer, having a free market at home is able to supply a wider and cheaper range of goods.

11. The effect of a surtax or a total prohibition applied to such articles will be to increase the cost of living to the British subjects of this Colony in order to give the opportuntiy of benefit to a group of manu- facturers who may still find their market too restricted to make efforts to replace the excluded foreign goods.

12. After due allowance has been made for war conditions the effect of the realization of the dream of an "All Red Route " in shipping to this Colony on freights, on fares, accommodation of passengers, on mail communications and on coal supplies has been driven home too deeply to require comment; while a glance at the published returns of the profits of shipping companies reveals the measure of probity that underlies the patriotism of this recommendation.

13. The fifth paragraph under C aims at the exclusion of ex-enemy subjects. The employment of ex- enemy or of any alien subjects in industries or professions which concern natural defence seems too remote a contingency to demand general consideration. If it implies, as the Assistant Comptroller of Customs seems to suggest, the direct taxation of ex-enemy subjects the principle involved would appear to be so revolutionary as to require specific mention in the terms of peace,

14. The resolutions embodied in the three paragraphs under the heading C do not appear to do more than enlarge those defined in B, save that they emphasize the theory of the eternal character of national grouping, while as for D it may be said to effect the policy of the members of the Conference alone.

TERMS OF REFERENCE TO THE COMMERCIAL AND INDUSTRIAL POLICY COMMITTEE.

15. It is necessary now to consider the additional questions put before the "Commercial and Industrial Policy Committee" The first of these is (a) What industries are essential to the future safety of the nation; and what steps should be taken to maintain or establish them. The answer to this may be given when the Com- mittee has collected the necessary data, and, unless any of the exports of this Colony affect that safety in a greater degree than is at present apparent, it seems to me that suggestions are either unnecessary or premature.