100 SECTIONAL ADDRESSES 
V. 
Prior to 1929 the long-term influences which prompted or rendered 
easy a policy of considerable national self-sufficiency had suffered a check. 
The movement towards stabilisation of tariffs and liberalisation of com- 
mercial relations between the different nations of the world seemed likely 
to gather strength ; and the excessive nationalism engendered by the War 
was subsiding slowly. But in the latter part of that year there was a 
collapse of confidence; and the onset of the great depression created 
an entirely new situation. Since then short views on international 
commercial policy have been dominant everywhere. 
It is a mistake, however, to conclude that the motives which have 
prompted measures of restriction in all countries since 1929 have had as 
their aim the destruction or even the curtailment of international commer- 
cial relations. Examination of the discussions in legislatures and study 
of the trade agreements actually concluded indicate that the principal 
object of all countries was (and is) to increase the volume of their foreign 
trade as a whole. But the volume of exports at the current low world 
prices, especially in the case of primary products, got out of line with the 
volume of imports. Strict control of the latter, therefore, was imperative 
if balances of trade (or rather the balances of income and outgo accounts) 
were not to be upset; for the consequences of this are a drain of gold 
reserves, depression of value of currency units and threat to the financial 
solvency of governments. : 
The course of events can be well illustrated by taking Great Britain as 
example ; but it must be borne in mind that the special conditions of this 
country do not permit of strictly parallel comparisons elsewhere. ‘The 
very great fall in gold prices which set in towards the end of 1929, due 
mainly to the financial collapse in that year in the United States of America, 
caused heavy curtailment in the foreign demand for British exports. On 
the other hand, British demand for foreign goods increased because of 
their new and lower prices. The difference, therefore, between the total 
value of visible imports and total value of visible exports was greater than 
before. This would not have mattered much if services rendered to 
foreigners and interest payments due by foreigners had not shrunk at 
the same time ; for the gap could then have been largely filled by a reduc- 
tion in the annual amount of new capital invested abroad or, with greater 
difficulty, by a realisation of part of the foreign securities held by English- 
men which still retained a reasonable value. As a matter of fact the 
gap was not filled to a sufficient extent in either of these ways. The 
consequence was an adverse balance in the income and outgo account 
of foreign trading which was estimated at {104 million in 1931 and 
£56 million in 1932, and an insistent demand on London for gold. Some 
gold did leave England and the Bank of England took the action which 
was usual and appropriate when this happened. Money rates, therefore, 
rose, prices tended to fall, exports were encouraged and imports were 
discouraged. Further adjustment, however, was necessary; for the 
situation, though not without precedent in kind, was unparalleled in 
extent. The fall in prices ought to have been accompanied by a fall in 
