The Imperial Conference
What happened behind the scenes of the Empire political drama at Ottawa
H. NAPIER MOORE
AS THIS is read, three weeks will have gone by since the Imperial Economic Conference was brought to a conclusion by the announcement of agreements officially satisfactory to the United Kingdom and to the Dominions. To what extent these agreements, when ratified, will go in alleviation of the Empire’s trading troubles, time will tell. But whether they prove to be successes more in theory than in practice, or successes in actuality, the thirty days of deliberation on Parliament Hill at Ottawa have borne more fruits than have been produced by any previous conference of its kind. Today, the ruling statesmen of the Empire have a clearer understanding of the problems of each unit in that Empire, and of its relationships writh the outside world, than they ever had before. They have listened to very plain talk and been up against hard facts. The too idyllic idealists of Empire have been sobered by a new and, to them, startling business diplomacy, and the too practial politicians have absorbed a little idealism.
Behind the terms of the agreements reached is the story of a political drama almost as tense as any enacted since the theatrical times of Disraeli. It was a drama in which for two or three days the future of Canada, and even the unity of the Empire, hung in the balance; a drama in which statesmen, with nerves drawn to the snapping point by morning to midnight meetings and bodies worn by days of prostrating heat, forsook the suave language of diplomacy and talked with hurting bluntness; a drama in which the Prime Minister of Canada stuck tenaciously to his principles, and, gambling his own future, won out in a battle wáth a National Government of the United Kingdom and regiments of the keenest and shrewdest bargaining and political brains that centuries of trading and international negotiating can produce. It was a drama in which the ringing of a transatlantic telephone bell meant either the shattering of a Conference on wrhich millions of hopes were pinned, or an acceptance of what was in effect nothing less than an ultimatum.
In the weeks that have passed since the Conference opened, no man has been the object of more bitter criticism and innuendo than has R. B. Bennett. In England it is noised abroad that here was a man impossible to deal with. An arrogant, hard-boiled man who talked in a manner undreamed of in the council rooms of Westminster. He has been accused of not knowing his own mind and of being too obstinate to change his mind, of being unprepared, of shillyshallying, of trying to run the whole Empire himself; of being ignorant of. or deliberately insensible to, the political and economic problems of the United Kingdom.
The truth of the matter is that each delegation was for its own country first. Adepts at propaganda, the U. K. delegates were more skilful than any one else in glossing that fact over. Mr. Bennett knew what he wanted and went after it. He also knew precisely how far he was prepared to go in the matter of concessions. The British knew what they wanted. But on major issues, what they conceded had to be pried from them, the prying process resulting in badly ruffled feelings.
Mr, Bennett’s Attitude
WHAT, then, was this so disturbing attitude of Mr. Bennett?
Russian competition and the British Liberal-Labor cry, “Your Food Will Cost You More,” were the two rocks on which the London Conference of 1930 foundered. The Canadian Prime Minister had justification for hoping for better luck this time. A National Government, committed to the principle of protective tariffs and backed by a large Conservative majority, was in power. Its delegation to Ottawa included the same Stanley Baldwin who had declared himself as being in favor of restricting Russian imports, and also so ardent an advocate of Imperial preferences as Neville Chamberlain. Then, by Mr. Bennett’s design, the Conference was on his own ground, away from the influence of a whole Civil Service which by training and tradition is more in favor of free trade than preference tariffs.
On the subject of Russia, Mr. Bennett had emphatic views. It was his opinion that continuance of Britain’s present ten per cent preference, while sufficiently advantageous to Empire goods in certain lines, must fail completely to be effective in other lines, such as wheat and timber, were Russia allowed to continue to dump those commodities at prices impossible of competition. Furthermore, he could not reconcile a professed Empire interest with the fact that while trade between the Dominions and the United Kingdom was declining steadily, Britain’s trade with Russia was increasing greatly. He found it impossible to understand why Britain should be content, after five years trading with the Soviets, to suffer an adverse balance of some $500,(XX),000, and to add vastly to huge credits, a large proportion of which might conceivably never be redeemed.
In his opening speech at the first plenary session. Mr. Bennett referred generally to his attitude. He submitted it
in detail to the heads of delegations at the beginning of the private discussions. And he stuck to his point with such persistence that never for a moment did Russia cease to be the main issue.
The Poker (fame Begins
"DEFORE the Conference assembled, the Canadian Prime ■*-' Minister believed that the essentials, as he saw them, could be settled in five days. 1 íe had a concentrated list of these items, and he had hopes that it would be possible for the heads of delegations to get together immediately on the basis of: “Do we agree on that? Yes. IX) we agree on this? No. Allright. How can we meet the case?” But it wasn’t so easy. The United Kingdom delegates at the outset wanted to know in precise detail what Mr. Bennett was prepared to concede all down the tariff list. Mr. Bennett played a few cards. Then he held his hand and asked precisely what the United Kingdom was prepared to do specifically in connection with Russia. For three weeks, the British delegation hummed, hawed and sidestepped, while, day after day, they telephoned to Ramsay MacDonald in Scotland. And during that period there
was launched against Mr. Bennett one of the most phenomenal whispering campaigns ever engineered at any conference. Certain of the U. K. delegates, advisers and secretaries dropped hints to the British newspaper correspondents, with whom they were in daily touch, that things didn’t look any too good, that Mr. Bennett was Shaving very strangely, that he had refused to outline any specific concessions, that he was attempting to bully them, and so on. It is an old trick, this inspiration of dispatches which, appearing in the English press, will promptly be cabled back to Canadian newspapers as being representative editorial opinion. In short, it was political strategy designed to force Mr. Bennett’s hand, or, in the event of failure to reach agreements, to pin the blame on Canada. Even more direct tactics were pursued. Three of the U. K. delegation spent a weekend at the summer home of the proprietor of a Canadian newspaper noted for its stalwart Conservatism. And. by an odd coincidence, a day or so later, that paper published an editorial chiding Mr. Bennett for messing up the Conference.
The press, in fact, nearly wrecked the Conference.
Meanwhile, Mr. Bennett, in an effort to force the issue by barter, came through with the utmost he felt able to give in the way of concessions. He offered to provide bigger
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markets for British steel and iron at the expense of the United States. He was willing to add to the free list cutlery, glass and a number of manufactured goods not made in Canada. And, most of all, he was prepared to open the door to British industry, particularly in the textile fields, on a fair competition basis by judgment of a tariff board before which British manufacturers might submit their case. But, for these concessions he must have positive guarantees that Britain would remedy that Russian dumping situation.
On the Monday of the final week of the conference, Mr. Bennett met the British delegation to discuss a tentative agreement drawn up on this basis. It looked to be all right at first glance, and J. H. Thomas, leaving the meeting fifteen minutes before it concluded, told a newspaper man that the agreement was as good as signed, sealed and delivered. But it wasn’t. Having read it. Mr. Bennett announced that he must consult his cabinet. The cabinet met at night and went on meeting until nearly three in the morning. And it would seem that Mr. Cahan said plenty on the question of textile concessions. At all events, next day Mr. Bennett went back to Mr. Baldwin and announced flatly that diplomatically worded formulas were useless. That, in exchange for the concessions given, he must be able to announce to the Canadian people and to the world in clear terms that the United Kingdom, in the same agreement, denounced her trade treaty with Soviet Russia. Failing that, there would be no agreement and the Conference, so far as Canada was concerned, was over.
There was a scene. There was another scene the next day when Mr. Baldwin, Mr. Runciman and Mr. Chamberlain urged the Canadian Prime Minister to think of their political position at home. They had a prevision of Lansbury, leader of the Parliamentary Labor Party, declaring, as he did on August 20, that British Labor would ask for a mandate in the next general election to “free the British people from any economic entanglements woven around them at Ottawa,” and that his party did not intend to break with the Soviet Republic. Mr. Bennett intimated that if they were in an embarrassing position with Russia, they had got themselves into it and that it was up to them to get out of it; that he had to think of his own position too, and particularly what he deemed to be the interests of Canada. And he wound up by delivering what was almost an ultimatum—no yielding on Russia, no agreement.
Again the transatlantic telephoning. A day of anxiety.
At 3.30 on the afternoon of August 18, the Canadian Cabinet and the United Kingdom delegates met in an atmosphere of the utmost tenseness. At five o’clock, pots of tea were taken in. At six o’clock, more pots. At seven, a London correspondent galloped to the cable and flashed that Mr. Baldwin had offered to agree to a clause providing that no unfair competitive business practices would be permitted to interfere with any Empire preferences but had declared that that was as far as he would go, and that if that was not acceptable the United Kingdom would conclude agreements with all Dominions except Canada and the Conference was over. A few minutes later, Canadian spokesmen emerged and announced that the last obstacle had been overcome. Embodied in the Anglo-Canadian agreements was to be the following clause:—
“This agreement is made on the express condition that, if either Government is satisfied that any preferences hereby granted in respect of any particular class of commodities are likely to be frustrated in whole or in part by reason of the creation or maintenance directly or indirectly of prices for such class of commodities through state action on the part of any foreign coun-
try, that Government hereby declares that it will exercise the powers which it now has or will hereafter take to prohibit the entry from such foreign country directly or indirectly of such commodities into its country for such time as may be necessary to make effective and to maintain the preference hereby granted.”
It did not denounce the Anglo-Russian ! treaty there and then, but, in the opinion of the Canadian Cabinet, it covered the situation. Mr. Bennett agreed. The Conference was announced to be a success.
Plethora of Perplexities
SUCH, then was the Drama of Ottawa. !
But it must not be assumed that any delegation was insensible to the problems of the other. Consider what each hoped to secure. Consider the complicated domestic problems of those from whom they desired to secure it. And the results obtained were, to reasoning people, surprising in their fullness.
What of Great Britain’s position? In the first place, Mr. Baldwin was loyal to Ramsay MacDonald. Mr. MacDonald is something of an internationalist. He had smoothed things out at Lausanne. He had hopes of similar successes at the forthcoming world conferences on economic and monetary affairs. He had before him the presidential elections in the United States, in which one candidate was inclined to be lenient with war debtors who would trade with Uncle Sam, and in which the other candidate was pledged to consider radical changes in tariff policy. Knowing that Empire trade is at present only twenty-eight jx?r cent of the world’s trade, it is possible that he may at times have felt that it might he injudicious for an Empire Conference to be so productive of results as to create antagonism on the part of other countries, particularly as any trading concessions granted by the Dominions must, for some time to come, represent a comparatively small amount in comparison with such vast sums as are involved in war debts, reparations, etc.
Then there was the Bank of England, very much against anything being done at all by committees on currency and exchange with a world conference pending. Consequently nothing at all was done.
In Ottawa, there was Mr. Baldwin, with the spectre of his own parliamentary speeches before him, leading a delegation in which the Big Three were Walter Runciman, an avowed Free Trader wed to a protective tariff by force of circumstances; Neville Chamberlain, filled with a hope of realizing his father’s objectives and eager to seek and give generous preferences, and Lord Hailsham, an ardent Imperialist. There they were, hearing Mr. Ikinnett insist on a preference on wheat and lumber and guarantees against Russian dumping, knowing that Britain in 1931 bought twenty-four per cent of her wheat from Russia and twentyfive j)er cent from Canada; knowing that she bought thirty-six per cent of her sawn lumber from Russia and only four per cent from Canada, and yet knowing equally well that the British co-operative wheat buyers, the millers, an imix>rtant timber ring and other manufacturers, not to mention the 1-abor representatives in the Cabinet, were not a bit keen on cutting out Russia which, they argued, offered a potential market of many millions of consumers against very few millions in the Dominions. They knew that j in recent weeks Russia had placed with British firms orders for locomotives, machine tools, leather gœds and a $500,tXX) textile contract. And then, of course, there was the British trade treaty made with the Soviets.
There was Mr. Baldwin, hearing Mr. Bruce ask for a preference on Australian meat and mutton, hearing Mr. Bennett ask for a bigger market for Canadian cattle, hearing Mr. Coates and Mr. Bruce and Mr.
Bennett ask for bigger buying of dominion dairy products, and knowing of Britain's huge financial interests in the Argentine and of her long-standing regard for Denmark.
And what of Mr. Bennett? There were the British wanting a bigger market for i steel and iron, for coal, for textiles and for manufactured gixxls of all kinds. Particularly did they want a good, strong foothold for their textiles. And there was Mr. Bennett, accused, on the one hand, of sheltering the Canadian textile interests at the risk of busting up the Conference, reminded on the other hand of Canada's 1.800 odd textile plants, employing 113.000 persons, paying out $103.000,000 in wages each year, and representing a capital investment of some $365,000,000. There he was, confronted by Canada’s $702,000,000 investment in steel plants, paying, in normal times, some 119,(XX) workers $169,000,000 a year in wages.
There was Mr. Bennett, faced with a delicate domestic situation. National revenues declining, cries for unemployment and other relief, daily beseechings that the Federal Government shoulder the burdens of three or four provinces, and the inevitability of an increased tax load falling on the industrialized East. The responsibility of pulling feathers out of the geese that lay the golden tax eggs was not lightly to be assumed. For the sake of Empire he could not jeopardize any industry. A man who is having his throat cut doesn’t care very much whether the man cutting it is a citizen of Great Britain, the United States, or Greenland.
On the other hand he felt he had to resurrect B.C. lumber industry, almost from the dead, by getting a preference on Canadian lumber, and by making that preference practical by the curtailment of Russian imports at cut-throat prices.
That, generally, was the situation. That, in spite of it, the Conference was able to make the progress it did in one month was remarkable.
Even more remarkable was what Mr. Bennett was able to secure new preferences in the United Kingdom market for wheat, butter, cheese, apples, (raw and canned), pears, dried fruits, eggs, condensed milk, copper; continuation of the present ten per cent duty on foreign lumber, fish, canned salmon and other fish, asbestos, zinc and lead, with Canadian products free; free entry for Canadian eggs, poultry, butter, cheese and other milk products for three years; modification of restrictions against Canadian live cattle; a promise to consider the lifting of the embargo on Canadian potatoes; a bacon and ham quota and continuance for ten years of the existing preference on Canadian tobacco. Herein lie advantages for every Canadian province, if they go after them.
In exchange, Mr. Bennett conceded new or larger margins of preference on some 220 items in the Canadian tariff, transferring many of them not made in Canada to the free list. He agreed to admit certain British lines to Canada on a basis of fair competition. detiils to he settled by a tariff board before which British manufacturers
would have the right to appear. Duties 1 against United Kingdom products will not be increased except on the report of that tariff board. Surcharges on United Kingdom products will be abolished as soon as Canada's finances are straightened out, and consideration will be given to Britain’s request that exchange dumping duties will be abolished. In short. Mr. Bennett, for the good of the Empire, has modified his high protectionist policy.
Bennett’s Empire Service
\ AACLEAN’S strives to be entirely independent of political party bias. Therefore it is from an entirely national viewpoint that its editor makes the appraisal that R. B. Bennett, as Prime Minister of Canada, did a really practical service to not only his own country but to the people of the Empire. For the first time in the history of such conferences he smashed through stalemate politeness and got something done. It took courage. It meant the sacrifice of personal esteems. It meant bold demands, and even bold concessions. But he stuck to his own convictions.
Mr. Bennett made up his own mind on a number of things. There was, for instance, the wheat preference. The U. K. delegation, fearful of the taxed food cry, eagerly pounced on the statements of Canadian and Australian growers’ representatives that they could get along quite nicely without a preference, thank you. On the eve of the Conference, officials of the Canadian wheat pools and of the grain growers, had assembled in Ottawa. They held many meetings among themselves and with the Australian wheat men. And the upshot was that they drew up three briefs inferring that they didn’t want either quotas or preferences. They feared that other countries outside the Empire would dump in the world market, and then what would happen to two-thirds of the Canadian crop. It is reported that Mr. Bennett was so surprised that he asked, “Well, what has the conference been called for?” However, convinced that a wheat preference could do no possible harm and that it might do a great deal of good, he went ahead and asked for a preference. Whereupon the pools and the grain trade, sensing political battle-cries such as “Look what we helped to get you,” suffered an unofficial change of heart and vied with each other in climbing on the band wagon.
A book might he written on the outside currents that played about the base of Parliament Cliff, but space is lacking in which to deal with them. The coming to Ottawa of industrialists, business men and agriculturists from all parts of the Empire cannot fail to increase their understanding of each others markets. They must have realized that the trade concessions made are all that the respective governments can do, and that no tariff concession ever devised can be of ultimate advantage unless the interests concerned themselves develop their salesmanship and service. Even from that point of view alone Canada’s expenditure in bringing the Conference to Ottawa was well made. It represented about one day’s deficit on the Canadian National Railways.