Miracle

With a mighty heave and roll as of giants turning over in their sleep, the leading bankers of the British Empire abruptly, jointly and publicly changed their minds last week. With the air of reporting a modern miracle the Financial News referred to "the bankers' complete volte face." Such a thing has not happened in a generation. It was as though President Hoover and Mr. Morgan should suddenly announce that they favored tearing down the U. S. tariff wall.

The British bankers, led by Midland Bank's famed Reginald M'Kenna, did an exactly opposite thing, came out in favor of building a tariff wall around the Empire. Up to last week, so far as anyone knew, they were Free Traders. Mr. M'Kenna is a Liberal and the Liberal party is pledged to Free Trade. Mr. M'Kenna was Chancellor of the Exchequer in Asquith's Coalition Cabinet (1915-16), a Free Trade affair. True, Mr. M'Kenna was the author of that half-hearted levy on imported products, the "M'Kenna duties," but they were carefully disguised by the term "luxury War taxes," and Chancellor M'Kenna would have been hooted, perhaps pelted in the streets had he not insisted, "I stand basically for Free Trade."

Bank after Bank. Signatories to the manifesto included two directors of the Bank of England, the chairman or a director of each of the "big five" banks, and a partner of such foremost fiscal houses of the realm as Morgan, Grenfell & Co.*

Text of Manifesto. As a corollary to the building of a tariff wall around the Empire, Britain's bankers urge abolition of all trade barriers between Empire lands inside the "Great Wall." The manifesto:

It is resolved that urgent measures for the promotion of inter-Imperial trade are needed to secure and extend the market for British products both at home and through the export trade.

Bitter experience has taught Great Britain that the hopes expressed four years ago in a plea for the removal of restrictions upon European trade have failed to be realized. The restrictions have materially increased and the sale of surplus foreign products in British markets has steadily grown. While we retain hope of an ultimate extension of the area of Free Trade throughout the world, we believe that immediate steps for securing and extending the market for British goods lie in reciprocal trade agreements between the nations constituting the British empire.

As conditions for securing these agreements Great Britain must retain her open market for all Empire products while prepared to impose duties on all imports from other countries.

Significance. The final push that sent the bankers over seemed, of course, to have been the new elevation of the U. S. tariff (see p. 18). In England, however, domestic political implications loomed as large as the international economic significance. The doughty "Hearsts of England," Viscount Rothermere and Baron Beaverbrook, who received such a flaying fortnight ago from Conservative Leader Stanley Baldwin (TIME, July 7), have been advocating for months precisely this program now advocated by Britain's banks. They have been calling it "Empire Free Trade" (TIME, Dec. 2, et seq.).

The newspaper Viscount and the newspaper Baron have been called blatant mountebanks for ballyhooing "Empire Free Trade," have been denounced by the leaders of all three British parties (Labor, Liberal, Conservative), but how now? Is a little game played with three tariff shells and a rubber trade pea still disreputable when endorsed by the Bank of England, the "big five" and Morgan, Grenfell & Co.? Most certainly not! Wrong was made right in a trice, last week, and black white.

Is Baron Beaverbrook then to achieve his consuming ambition? Will he become Prime Minister? Will he then make Viscount Rothermere's only son, Hon. Esmond Cecil Harmsworth, British Ambassador to Somewhere, as that young man and his doting father hope? Even in the face of last week's "miracle" such a development seemed remote--but the old guard politicians must work fast to avert it.

How is Mr. Baldwin to lead his Conservative party if not in step with the bankers? Yet they came out last week in favor of the scheme of two men he had called "political blackmailers" the week before. Can Liberal Lloyd George remain a Free Trader now that Liberal M'Kenna has climbed on the tariff bandwagon? As for Mr. MacDonald, acutely conscious was he last week that, concurrently with the bankers, the economic committee of the Trade Unions Congress adopted a resolution favoring the tariff wall. All England seemed to have become suddenly tariff-conscious.

As usual, while other politicians remained silent in dumb perplexity, Mr. David Lloyd George erupted into safe and pious words. To the Congregationalist Council at Bournemouth (see p. 60) he thundered:

"The international situation is bad. We are building up barriers against each other, putting up fences against each other and restrictions against each other. We are blockading each other, and we are trying to starve each other.

"Trade is treated as if it were contraband. The atmosphere is poisoned with suspicion and mistrust. Let us have brotherhood. It is only the Christian churches that can do it. It is for you to do it."

*Full list of signatories:

Sir Alan Garrett Anderson, director Bank of England

Walter Kennedy Whigham, director Bank of England

Rt. Hon. Reginald M'Kenna, chairman Midland Bank, Ltd.

Lord Ashfield, director Midland Bank, Ltd.

Sir Harry Goschen, chairman National Provincial and Union Bank of England

Robert Hugh Tennant, chairman Westminster Bank, Ltd.

Sir Harold Edward Snagge, director Barclays Bank, Ltd.

John William Beaumont Pease, board chairman Lloyd's Bank, Ltd.

Sir Eric Hambro of C. J. Hambro & Son

General Hon. Sir Herbert Lawrence, a managing partner Glyn, Mills & Co.

Edward Robert Peacock, director Baring Brothers & Co., Ltd.

Vivian Hugh Smith, partner Morgan, Grenfell & Co.

Viscount Bearsted of Samuel & Co. and chairman of the Shell (oil) Transport & Trading Co.

Sir George Ernest May, secretary Prudential Assurance Co.

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