Commonwealth Trade and Beyond

MR. JOYCE: We welcome as our speaker today Mr. Walter Taplin, who was recently appointed by the British Broadcasting Corporation to act as an advisor on economic affairs and to produce programs on economic subjects.

Mr. Taplin has acquired a very sound reputation as a broadcaster and commentator on international affairs, having been heard regularly on the B.B.C.'s European and North American Services.

Born in Southampton 44 years ago, Mr. Taplin graduated in Commerce from University College, Southampton, and then took his degree in politics, philosophy and economics at Queen's College, Oxford.

After a period as tutor-organizer for Adult Education in West Hampshire and East Dorset, he joined the staff of The Economist, London, in 1936 as an Assistant Editor, dealing mainly with home economic affairs.

During the war Mr. Taplin served in the Food Import Branch of the Ministry of Food and then in the office of the War Cabinet. In 1945 he was a member of the British Delegation to the Reparations Conference in Paris.

After the war, Mr. Taplin returned to The Economist for a short time, but left to become Assistant Editor of The Spectator. He was appointed Editor in 1953, but left in 1954 when the newspaper changed hands.

Mr. Taplin will speak to us on "Commonwealth Trade and Beyond".

MR. TAPLIN: Gentlemen, as you have heard, I am to speak on "British Commonwealth Trade and Beyond", and I want to make this the opportunity for an analysis of the nature of British Commonwealth trade and of the elements in British Commonwealth trade. If I say a number of things which are completely familiar to you, I hope you will be patient with that, because I hope to come on, ultimately, to something a little new.

I think it is essential at this time, first of all, to be clear on just exactly what the main elements in the basic idea of Commonwealh trade are. Now, of these elements I will take, first of all, the historically fundamental, but extremely crude idea of economic imperialism. This, historically, is the concept with which the whole thing begins. It begins with the first plantations which were based on the straightforward but not entirely admirable ideas of subduing native populations, using the resources of the countries thus subdued for the benefit of the home country, and quite often for the personal benefit of absentee owners.

This, I say, is a very simple, very crude and not admirable idea. In fact, it is not even an economically effective means of organization. The development of economic imperialism has been away from that idea toward more enlightened concepts.

Development away from that idea was pretty continuous until the 19th century when Britain had in effect reached the opposite extreme. The dominant idea about the British Empire in the 19th century-that century in which Britain became, through overseas trade, the wealthiest country in the world-the dominant idea of Empire trade in that century was that the countries of the Empire were, far from being assets, something of a liability, even a positive nuisance. The great traders of the 19th century built up British wealth on a principal of free trade and of no interference. The idea that government could intervene to promote certain types of relationship between the countries of the Empire was not one which was popular with the vast majority of traders and business men in the last century. They had built up their British wealth on free trade. They were accused, by the end of the century when the idea of Empire had begun to revive, of having acquired the British Empire in a fit of absence of mind. Now, by the end of the century, ideas were beginning to change. We had entered the era what is called the "New Imperialism" and we had something of a reaction back towards closer economic ties between the countries of the Empire, ultimately strengthened by the force of the Government itself.

This phase which got going in the last quarter of the last century, was continuous and I think reached its peak or, if you like, its lowest point, in the Ottawa Agreements of 1932. These Agreements, as you know, were agreements giving certain exclusive advantages to the countries of the Commonwealth in their trading with each other. These Agreements were the product of depression. They were the product of a state of mind in which individual countries, and where possible groups of countries, tried to save themselves from the fury of economic storm. They were agreements to ensure protection for the industries and some of the extractive activities of the Commonwealth, and I would say that once you moved away from circumstances of depression, the Ottawa Agreements were bound to fail. They were, in fact, particularly inappropriate in an atmosphere of trade expansion and from the middle of the '30s we had the growth of such an atmosphere, so that these Agreements just faded away and tended to become less effective because circumstances did not suit them.

In fact, we got back into the main stream of development of economic imperialism, that is to say the stream which runs away from the idea of close economic and political association for trading purposes, and toward greater freedom in trading relationships.

In the Ottawa Agreements there is in fact an interruption in the long historical process away from the crude idea of economic imperialism, which I outlined in the beginning. I would say - and this is my personal opinion - at this moment economic imperialism is dead. Or, if it lives at all, it only lives in the mind of Lord Beaverbrook. I would say that if there is a danger in economic relationships at the moment, where the Commonwealth is concerned, it is not danger of imperialism, but a danger of the opposite, of what I would call unimperialism.

Now, I may be very reactionary in this respect, but I think one of the more appealing statements made by Sir Winston Churchill, in the course of his many great statements, was the one in which he said that he had not become His Majesty's First Minister to preside over the dissolution of the British Empire.

That gives me a fine sentiment. It is perfectly simple to see what dangers can arise from a misinterpretation of that statement. But the correct interpretation is one which sees danger in withdrawing too quickly, in assuming too readily that the Commonwealth has no contribution to make to the welfare of the world. We must remember in any analysis of Commonwealth trading relationships that we have developed away from economic imperialism. Don't let us develop away too far into unimperialismto nothingness in the economic relationships of the Commonwealth.

That is the first element in Commonwealth trade, as I am attempting to describe it, by an analytical method. Now, let us turn to the second element which also has its roots pretty deep in history, which is a completely different idea from that of economic imperialism. This is the idea which we call colonial development-the idea that we are interested in the welfare of colonial territories. We are interested in the economic and political life of colonial territories, in order that they may in due course stand on their own feet.

I am using the word "colonial" (which is a rather dangerous word) in the strict legal sense. I am referring to those parts of the Commonwealth which are still under the direction of the British Government through the Colonial Office in London. The term "colonial" in its present application applies only in that limited sphere. I don't include any of the major parts of the Commonwealth. I don't include Canada. I hope that makes me safe for the rest of this talk.

Now, the idea of colonial development is something more than mere paternalism. It is not simply a matter of looking after children, but rather the idea of looking to the economic and social health of the colonial territories in order that ultimately they may achieve economic and political independence.

This is a policy which has been pursued for many years has reached a high stage of development in the case of the Gold Coast which now has, in addition to considerable economic strength of its own, a political organization which gives a very large degree of self-government.

The same thing may apply in due course to the West Indies, where there is a movement toward Federation which is being actively encouraged by the British Government.

The idea of colonial development, I would say, is an idea which at this moment is in high fashion in Britain. We have heard more talk about this development. We have had more action in the sphere of development in the post-war period than we have had for many years before that. It is the subject of competition between the two main political parties - a competition to see which party can spend the most. There is no shortage of funds. There has been no question of any kind of exploitation of the colonial areas, but rather the reverse. The entire background has been one of concern about their welfare, in the hope that in the long run there will be more concrete economic results.

This is, as I say, the fashionable atmosphere in British politics at this moment, and clearly it extends well beyond the sphere of the British Government or the Commonwealth as a whole. It is, in fact, given a very high place and very heavy emphasis in the plans of the United Nations. The development side of the United Nations organization is very active and its aim is greater service to the undeveloped countries throughout the world.

I think you can put this under the general heading of what I call colonial development. I wouldn't be put off by the fact that among some of the countries to which this aid is given the word "colonialism" is used as a term of abuse.

I think colonialism is a very good thing, and I think it will be many years before we can dispense with the idea of aid from more developed countries to the less developed countries throughout the world.

The size and character of investment in colonial countries has changed. Before the war it was mostly private investment. It was kept going by Commonwealth assistance during the war. There are still welfare funds and government agencies for pumping money into colonial territory, and there are public boards which undertake to underwrite investments in projects in colonial territories which are a little too risky to attract private capital in the ordinary way. Colonial development schemes can also supply more solid foundations for anyone wishing to undertake commercial investment.

The proportion of the money now going from Britain into colonial territories for background services - education, welfare, social expenditures - is a very high proportion, higher than ever before.

Now, this is the second element in my analysis of the major Commonwealth trade. This you can set in sharp contrast to the first element of economic imperialism. Economic Imperialism and Colonial Development-they are two different ideas, but both fitting into the concept of Commonwealth trade.

Third of these elements in the analysis, I would put the slightly more complex idea-slightly more complex both in nature and extent - which we call the Sterling Area. There have been many attempts to explain the sterling area in words of one syllable. I will try to describe as far as I can in general terms what the sterling area is.

Up to 1931 it was very easy to define what the sterling area was. Up to 1931, when we in Great Britain came off the gold standard for the last time, the sterling area and the world were the same thing. Gold and sterling were interchangeable freely, and London was the financial center of the world. Countries throughout the world, whatever their local circumstances were, found it convenient to keep their bank balances for international trade in the City of London. The City of London was the banking center of the world. The bank balances were held there in sterling because all the countries wanted it that way. That was the way they preferred it. It was a perfectly voluntary arrangement. All the cities of the world treated London as a banking center and kept their balances there.

I said this was the situation until 1931 when Britain went off the gold standard for the last time. Most of you know Britain had gone off the gold standard before that. In fact, Britain was off from the beginning of 1919 until 1925 when the Chancellor of the Exchequer at that time (not a very successful Chancellor of the Exchequer-Winston Churchill was his name) put us back on the gold standard. When we were off the gold standard, London still, despite that, continued to function as the banking center of the world. Since 1931 this situation has changed. The number of countries which are willing to treat London as this banking center has been reduced. The holdings of the gold resources of the world has been switched across to this side of the Atlantic and we now draw a distinction between the sterling area and the dollar area. Today the sterling area consists, roughly speaking, of the Commonwealth, minus Canada (because Canada is a dollar country) and plus one or two small miscellaneous countries which are not in the Commonwealth - Iraq, Lebanon, Iceland, and, believe it or not, the Republic of Ireland. Membership in the sterling area is based on free will, for what else could make the Republic of Ireland a member of any organization with its headquarters in London?

Now, I am saying the sterling area is based upon free will. It is a banking arrangement, voluntarily entered into by certain countries of the world, most of them Commonwealth countries. Perhaps I am overstressing this slightly. If I could introduce a qualification, I would introduce one in the terms of George Orwell's satirical work, "Animal Farm"-that farm in which "All the animals were equal, except that some of the animals were more equal than others."

In this case I think you could draw such a distinction between, for example, Australia, on the one hand, and Jamaica, on the other. I would say Australia has got a bigger pull in the sterling area's control than has Jamaica. Australia has more weight and is more willing to throw it about.

But Australia, if I may introduce a little elementary geography, is different from Jamaica. It needs less help than Jamaica. The situation must be admitted but there is no need to apologize for it. But I think those colonies which may not have quite as much say as the other members of the sterling area as to how exactly the balances are controlled, are still net gainers. It is a banking transaction-they lend what sterling they earn to the bank, just as you would keep your balance, if any, in a bank here in Toronto. The colonial territories only lend, only deposit, the money with the bank, but as a net result of the total colonial relationship, they are gainers, for they are given aid, through colonial development and welfare. This does not apply to Australia. It does apply to Jamaica.

Now, let us turn from this idea of the sterling area, this voluntary banking arrangement, which is part of the Commonwealth organization at the moment, to one other idea - that of the Colombo Plan. Now, the Colombo Plan is to help certain countries of Southeast Asia that are in some danger of slipping into the Communist camp. By means of certain aid to these countries we are building them up economically so they will realize the danger of going over to the Communist camp. So there is an ulterior motive to aid to these countries. It is not aid for the sake of aid, but aid with an end in view. It is not confined to the Commonwealth. It includes countries such as Burma, which is no longer a member of the Commonwealth; the remnants of Indo-China, formerly a French overseas territory; Indonesia, formerly a Dutch area; and at the investing end there is the United States of America as well as Britain.

The Colombo Plan is sometimes represented as a purely Commonwealth device. I have heard it so described during my recent visit to the United States. But you can only make sense of the statement that it is a Commonwealth device by assuming the United States has come back into the Commonwealth. This scheme, the Colombo Plan, if it is successful, leads not only to economic self-help, but to self-defence and resistance to Communism.

Now, I would not go so far as to say that the dominant motive for the Colombo Plan is a new form of imperialism. Don't let us bring that in. But I think it would be safe to say there is not unimperialism about the Colombo Plan. The idea is to treat the free world, dominated by the Western Powers, as a unit, and to bring certain wavering countries more solidly into that unit. That, I say, is not imperialism but, fortunately, it is free from the taint of unimperialism, from the open door policy, whereby anybody can go in the direction of Communism. The idea is that these countries shall remain in the free world and not go in the direction of Communism.

Those are the elements in the analysis-Economic Imperialism; Colonial Development; the Sterling Area; and the Colombo Plan. I think you will see the sort of development which this implies. It is a development whereby the boundaries of the Commonwealth are becoming in the economic sphere more vague, less clearly defined than they used to be, - a development as you move on from the older elements to the idea of the Colombo Plan, toward a situation in which you are not dealing with the entire Commonwealth. Certain parts are excluded in certain respects - such as Canada, which is excluded from the sterling area. And you have certain elements in the Colombo Plan which are not in the Commonwealth at all. We are moving toward, in this description of the uncertain boundaries of the Commonwealth, a new economic situation.

Now, we know we have already moved a long way toward this economic phenomenon. And corresponding with the vagueness of its boundaries is a certain vagueness about its name. We used to call it the British Empire. Then we seemed slightly nervous about that and we began to call it the British Commonwealth and Empire. Then we began to call it the British Commonwealth. The late King George VI once called it the British Commonwealth of Nations. Now, we call it the British Commonwealth. Where do we go from here? We don't know quite now. But at least I am glad to see that an Empire Club still exists here in Toronto.

Well, now consider the movement towards a new economic situation. We have a sterling area which does not coincide in its boundaries with the Commonwealth. We have the Colombo Plan, which does not coincide with the Commonwealth. It is something which has just happened. And you can't do violence to economic development by mere political interference, by painting certain areas on the map in red. That doesn't settle the question at all. When you are dealing with the Commonwealth as an economic entity there is a shading into the other colours. There is the movement toward freer trade in the world from which the Commonwealth cannot stand aside.

I would also say that political health helps to produce economic health and therefore you cannot expect a country which is economically unsound to move automatically in the direction of sound political ideas.

But even if political health did not presuppose economic health, we would still be wise to try to lay a sound economic foundation in every possible country in the world. In many undeveloped countries it is true you find a resistance to economic development. You find the use of "colonialism" as a word of abuse among the countries of Southeast Asia. You find countries which have aspirations which are social and political, and not in a major sense economic at all. They want to be not so much rich as free-free even to go Communist. That seems to me to be going beyond the legitimate boundaries of political freedom. I think they have to be shown that political freedom can, and in many cases does, rest upon the economic foundation.

I would say, as a generalization, that the greatness of Canada and of the United States is very intimately connected with their productivity and their great powers of expansion in the economic field. And I think you envisage a similar connection in some of the undeveloped countries of the world. There is a connection between prosperity and political freedom. But it can't be assumed that political enlightenment in underdeveloped countries will follow automatically from economic aid. Trade, to be successful, must be free, as far as possible, from restrictions. The freer you keep it the more likely you are to demonstrate the success of economic expansion.

This is the thing which makes it so difficult to put any economic boundary around the Commonwealth. The Commonwealth economic boundaries seem to me to be breaking down. This does not mean that the Commonwealth is breaking down. Far from it. I think the Commonwealth relation is becoming stronger. But if it is to survive, and I think it will survive, it will survive not so much because of the economic links within the Commonwealth for these are giving place to a freer association. It will survive not so much as an economic phenomenon as a political phenomenon.

I think we still have a number of ideas about freedom, and free living together in peace with each other, which are worth while putting before the rest of the world. They are worth while keeping well to the forefront in our own daily attitude, our thinking as to the Commonwealth. The Commonwealth has its economic links, but I think they have to take second place to the political and spiritual links. For if the Commonwealth doesn't survive as a political association of free men, then it doesn't survive at all.

THANKS OF THE MEETING were expressed by Mr. Donald H. Jupp, the Third Vice-President of the Club.